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Why get pre-approved?

It is important that you make sure you are home shopping in a range that you are comfortable making the payments. If you start shopping in a price range that is outside of your comfort level it is very hard to lower your expectations of a home after starting with homes with more amenities.

When making an offer, a seller wants to make sure you will be able to close so they will require a pre-approval letter before they take your offer seriously. If there are other offers on the table, the seller is most likely to work with buyers who are already pre-approved.

Income for per diem jobs doesn’t always count as full-time. Tips & commissions are also calculated differently and have more stipulations during the financing process. It’s best to reach out to a lender at the beginning of the process to make sure you know what you are qualified for.

Getting Pre-Approved

TYPE OF LOAN	CREDIT SCORE	DOWN PAYMENT
VA LOAN	620	NO DOWN PAYMENT
USDA LOAN	620	NO DOWN PAYMENT
FHA LOAN	580+ 500-579	3.5% 10%
203K LOAN	640	3.5%
CONVENTIONAL 97	620	3%
CONVENTIONAL LOAN	640	5-20%

QUALIFYING INCOME	NON-QUALIFYING INCOME
W-2 Income/Salary	Income from the lottery
Income from part-time jobs	Gambling
Income from a second Job	Unemployment pay
Overtime & Bonuses	Single bonuses
Seasonal jobs	Non-occupying co-signer income
Self-employed Income	Unverifiable income
Alimony & child support (Documentation required)	Income from rental properties

W2’s from the past 2 years
3 months worth of pay-stubs
Bank statements (past 3 months)
Previous 2 years of tax returns
List of your debts & assets
Divorce decree
Additional income documents

	WHO QUALIFIES	DOWN PAYMENT	UPFRONT MORTGAGE INSURANCE	MONTHLY MORTGAGE INSURANCE	MINIMUM CREDIT SCORE
VA Department of Veteran Affairs	Veterans, Personnel with honorable discharge, Reservists & National Guard, and Surviving Spouses	NONE	NONE	NONE	580
USDA Department of Agriculture	Someone who is buying a home in a USDA-designated rural area.	NONE	2% of the loan amount. Can be rolled into loan amount.	REQUIRED	640
FHA Federal Housing Administration	Anyone who meets the minimum credit and income levels.	At least 3.5% of purchase price	1.75% of loan amount	REQUIRED	580-640
203K Federal Housing Administration	Anyone who plans to purchase a fixer-upper or needs to renovate their home and meets credit & income requirements	At least 3.5% of purchase price	1.75% of loan amount	REQUIRED	580-640
CONVENTIONAL 97	Depending on the program, available first-time home buyers (a buyer who hasn't owned in the last three years) can put 3% down with a Conventional 97 program.	Varies from 3%-20% of purchase price	NONE	REQUIRED	620
SELECT SMART PLUS	Anyone who meets lenders credit, income & debt level requirements	Varies from 3% -20%, but typically ranges from 5-20%	NONE	REQUIRED	620

What to keep in mind when figuring out your budget

Once you find out what you're qualified for it might be higher than what you are comfortable paying. Make sure to calculate what your monthly expenses are with groceries, health insurance, car insurance, etc, and all living expenses that aren’t figured into your loan like water, gas, electric, and internet bills. You will also want to budget savings for repairs and future improvements.

How to find a lender

Your Real Estate Agent is always the best resource!

You may use any lender you prefer, as long as they are licensed in the State you are purchasing. Using a local lender that has experience in the area helps streamline the process. You also want to make sure they are easy to communicate with and will explain the process to you and answer all of your questions. If you are pulling equity from an existing property, it is best to use a local lender where that property is located.

What NOT to do during the transaction

Changing jobs without talking to your lender.
Not telling your lender if your income structure will be changing in the future if your employer changes the way you are paid hourly, this could potentially make you not approved for the Home.
Adding new debt, do not sign up for any credit cards that offer a discount, and/or buy furniture for your future home, car or recreational vehicle.
Maxing out your Credit Cards.
Don’t miss any current payments you may have.
Moving Money around from account to account.
Do not co-sign for anyone.
For large cash deposits, any large cash deposits the lender will need to verify where these funds came from. If the lender cannot document these funds, they will not be able to use them for your cash to close.
Not using an earnest money check from your account. If you use cash as earnest money, we may or may not be able to give you the earnest money credit at the end of the transaction.

*Most lenders will pull your credit again right before closing and re-verify your employment with your employer

*Your lender may have other loan options or down payment assistance programs. Programs, income qualifications, and requirements are subject to change. This information is for general informational purposes only. The Lanissa Fortner Team can not guarantee the accuracy, completeness, or relevance of the information provided.

The information provided in this guide is intended for general informational purposes only. It is not intended as legal, financial, or professional advice.

The content within this guide is based on information available at the time of publication and may not reflect the most current legal or market developments. Real estate laws, regulations, and market conditions vary by location and are subject to change. Therefore, The Lanissa Fortner Team cannot guarantee the accuracy, completeness, or relevance of the information provided.

The Lanissa Fortner Team and its affiliates, contributors, or authors of this guide shall not be held liable for any losses, damages, or inconveniences arising from the use of or reliance on the information provided in this guide.

Please note that laws, regulations, and best practices can vary and change over time, and it is advisable to verify information from primary sources and consult with professionals before making any real estate decisions.

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Financing Guide