Five Factors That Affect Mortgage Loan Approval

Applying for a mortgage is not like trying to get a credit card or even a small personal loan. When you set out to purchase a house, you are usually asking for a great deal of money. In fact, you are probably embarking on the single largest investment you will ever make. For that reason, you should be aware of anything that might affect your mortgage loan approval.

1Credit Report
This is the most obvious factor that will affect your mortgage loan approval. Even if you think you know what is on your credit report, it is always best to obtain a copy from each of the credit bureaus before applying for a mortgage loan. Experts estimate that 40% of credit reports contain errors, and if you are one of those people, your mortgage loan approval could be in jeopardy through no fault of your own. In most cases, each of the credit bureaus will have different information on file, so make sure you obtain your credit report on each. Visit,, and to obtain your free credit report. To get your free credit score, once a year you can obtain it from

WARNING: Do not pay Transunion, Experian, or Equifax for a credit score. They use a different scoring model than lenders use so it will not be applicable to your mortgage application. Do not rely on free credit scores sites like CreditKarma, or similar sites, for the same reason. In addition to inaccurate credit scores, these websites also collect and sell your information which will trigger a host of spam calls, emails, and/or text messages. To protect yourself visit prior to requesting a credit pull.

2Credit Cards
Watch your credit card usage closely during the months preceding a mortgage loan application. Any activity on your credit report that might indicate irresponsible spending could put your mortgage loan approval in jeopardy. Avoid canceling any credit cards, especially an older account that establishes a long-term credit history. If you can, it is best to maintain a balance of 30% of your maximum limit to help improve your credit score. You should also avoid applying for several credit cards because those are red flags to mortgage lenders, however it is advised to call your credit card company and request a limit increase. This will not only reduce the amount you need to keep to stay at/under the 30% balance, but it will also help show you are responsible with a higher credit limit. Before making any significant changes or payments please speak to your mortgage expert to see how this could impact your credit score and, subsequently, your loan.

3Outstanding Debts
If you apply for a mortgage loan while you still have several thousand dollars worth of outstanding debts, you have a significant chance of being denied. Mortgage lenders are wary of extending debt to individuals who already have too much on their plate, so try to pay off as many debts as possible before applying for your mortgage loan. There is a caveat, however. If the debt is derogatory and/or in collections then talk to your mortgage expert first! Paying it off could negatively affect your credit score in some cases, which could hurt your loan approval.

4Employment Status
Most loan programs require at least a 2 year work history, and that the employment is likely to continue. Lenders will call the employer(s) listed on your application during the loan process to verify you still work there. So if you're thinking of making a jump to a new company try to coordinate it until after you close on your home. If you have been at your current job shorter than 2 years don't worry, you are not automatically denied. Your mortgage expert will be able to walk you through what is needed to navigate through this step and, ulitmately, achieve mortgage loan approval.

When you apply for a mortgage loan, you have to consider all of the costs involved. Not only will a down payment be involved, but you will also be responsible for closing costs, movers, utility transfer and/or setup fees, etc. Make sure that you have enough capital in your savings account before applying for a mortgage loan. If you don't have sufficient funds to complete the transaction, your application will be denied.