Purchasing a home is one of the most significant financial decisions you’ll ever make. Whether you're a first-time buyer or upgrading to your dream home, securing a loan is a critical step in the process. It can also be one of the most intimidating parts if you're unfamiliar with how lending works. At Crescent Title, we understand how important this step is, which is why we’ve put together this comprehensive guide to walk you through the key steps to secure your loan with confidence.

Step 1: Understand Your Financial Picture

Before reaching out to a lender, take a close look at your financial health. Mortgage lenders want to see that you’re financially stable, responsible with credit, and capable of repaying the loan over time. The stronger your financial profile, the more loan options you’ll have.

Review Your Credit Score

Your credit score is one of the first things lenders will check. It impacts your loan eligibility, interest rate, and down payment requirements. The higher your score, the better your options. Most conventional loans require a score of at least 620, while FHA loans can be approved with a score as low as 580.

Tips to improve your score:

Pay down credit card balances
Dispute any errors on your credit report
Avoid opening new lines of credit before applying

Assess Your Income and Debt

Lenders calculate your debt-to-income (DTI) ratio to determine how much of your income goes toward debt. Generally, lenders look for a DTI below 43%, although some may allow a higher percentage for qualified borrowers.

Add up all monthly debt obligations (car payments, student loans, credit card minimums) and divide that by your gross monthly income. If your DTI is too high, work on paying off debt before applying.

Save for a Down Payment and Closing Costs

Down payments can range from 3% to 20% of the home price, depending on the loan type. Closing costs typically add another 2% to 5%. A larger down payment may lower your monthly payments and help you avoid private mortgage insurance (PMI).

Build a budget and savings plan early so you’re financially ready when you find the right home.

Step 2: Get Pre-Approved

Before shopping for homes, it’s smart to get pre-approved for a mortgage. This step helps you understand what you can afford, gives you credibility with sellers, and makes the closing process faster.

What Is Pre-Approval?

A pre-approval is a conditional offer from a lender stating how much they’re willing to loan you based on your financial situation. It’s more formal than a pre-qualification, which is only a rough estimate.

To get pre-approved, you’ll need to provide:

Proof of income (pay stubs, tax returns, W-2s)
Proof of assets (bank statements, investment accounts)
Personal identification
Credit authorization

Once approved, your lender will provide a pre-approval letter you can show to sellers and agents.

Step 3: Choose the Right Loan for You

There are several types of home loans available. Choosing the right one depends on your financial profile, the type of property, and your long-term goals.

Conventional Loans

These are not backed by the government and typically require good credit and a solid down payment. They often offer lower interest rates and fewer restrictions on the type of home you can buy.

FHA Loans

Backed by the Federal Housing Administration, these loans are ideal for first-time buyers or those with lower credit scores. They require a minimum down payment of 3.5% but come with mortgage insurance.

VA Loans

Available to eligible veterans and active-duty service members, VA loans are backed by the Department of Veterans Affairs. They often require no down payment or mortgage insurance.

USDA Loans

These loans are designed for buyers in rural areas and offer low interest with no down payment for qualified applicants.

Adjustable vs. Fixed-Rate

Fixed-rate loans lock in your interest rate for the life of the loan, offering stable payments.
Adjustable-rate mortgages (ARMs) start with a lower interest rate that can adjust after a few years, potentially increasing your monthly payment.

Discuss options with your lender to determine what loan type and term work best for your situation.

Step 4: Gather Documentation

Once you’ve chosen a lender and loan type, the next step is submitting a full mortgage application. Lenders will request a number of documents to verify your financial stability.

Common documents include:

Proof of identity: Driver’s license or passport
Income verification: Recent pay stubs, W-2s, and tax returns for the past two years
Employment history: Name, address, and contact for your employers
Bank statements: For the past 2-3 months
Asset documentation: Retirement accounts, investments, etc.
Debt information: Monthly payments on credit cards, loans, or child support

Having all documentation ready ahead of time can speed up your approval and reduce last-minute requests from the lender.

Step 5: Underwriting and Loan Processing

Once your application is submitted, the lender will begin the underwriting process. This is when they evaluate your risk as a borrower by closely examining your finances and the property itself.

What Happens During Underwriting?

Credit and income review: The lender verifies your employment and evaluates your creditworthiness.

Asset verification: They ensure you have sufficient funds for the down payment and closing costs.

Appraisal order: An independent appraisal confirms that the home’s value matches the sale price.

Title search: A title company, such as Crescent Title, will verify that the property has a clear title with no outstanding liens.

Your loan can be approved, suspended (requiring more documentation), or denied at this stage. Stay in communication with your lender and respond promptly to requests.

Step 6: Clear Conditions and Receive Final Approval

If the underwriter has questions or needs more paperwork, you’ll receive a conditional approval with a list of required items. These might include:

Updated pay stubs
Letters of explanation for credit inquiries
Verification of assets used for the down payment

Once you provide what’s needed and all conditions are satisfied, your loan will receive final approval, also called “clear to close.”

This is a big milestone—your lender has officially approved the funds for your home purchase.

Step 7: Review the Loan Estimate and Closing Disclosure

Your lender will provide two important documents during this process:

Loan Estimate

This outlines your loan terms, monthly payments, estimated taxes, insurance, and closing costs. It must be provided within three business days of your application.

Closing Disclosure

This is a finalized version of the loan estimate that you’ll receive at least three days before closing. It provides the exact numbers you’ll see at the closing table.

Review both documents carefully to ensure there are no surprises. Ask your lender or closing agent to clarify anything you don’t understand.

Step 8: Final Walkthrough and Closing Day

With your loan approved, you’re ready to close on your new home. Before that happens, you’ll schedule a final walkthrough to make sure the property is in the expected condition.

On closing day, you’ll meet with your closing agent, lender, and possibly your real estate agent to sign paperwork and pay closing costs.

You’ll need to bring:

A valid photo ID
Proof of homeowner’s insurance
Certified funds or a wire transfer for closing costs

After the documents are signed and funds are distributed, the title company records the deed. Congratulations, you’re now a homeowner!

How Crescent Title Helps You Secure Your Loan

At Crescent Title, we act as your advocate during the closing process. Once you’re under contract and your loan is in motion, our experienced team helps:

Conduct title searches and resolve any issues
Provide title insurance to protect your ownership
Prepare and explain all necessary closing documents
Coordinate with your lender and real estate agent
Ensure legal compliance and a smooth transfer of ownership

We believe that closing on a home should feel like a celebration, not a source of stress. Whether you’re a first-time buyer or seasoned homeowner, we make sure every detail is handled correctly.

Secure Your Loan with Confidence

Securing a home loan doesn’t have to be overwhelming. By preparing your finances, choosing the right lender, submitting documentation on time, and working with professionals like Crescent Title, you can move through the mortgage process with confidence and clarity.

From pre-approval to final closing, every step plays a role in helping you reach your homeownership goals. If you’re ready to take the next step, let Crescent Title guide you through the process!

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