Mortgage Tips
How to Get a Mortgage
This video walks through what lenders look for, the main loan types, and how to prepare your credit and budget so you’re truly mortgage-ready.
Voice Over Script – How to Get a Mortgage
“Welcome to ‘How to Get a Mortgage – From Credit Score to Keys.’ Buying a home is one of the biggest financial moves you’ll ever make, and your credit plays a major role in the rate, terms, and programs you qualify for.
In this lesson, we’ll walk through what lenders look for, the major types of mortgage loans, and how to know what price range is truly affordable for you. You’ll learn the basics of FHA, conventional, VA, and other loan options, how your debt-to-income ratio affects approval, and why your down payment and savings matter just as much as your score.
We’ll also use a simple mortgage calculator so you can plug in real numbers and see how changes in price, interest rate, or loan length affect your monthly payment. By the end, you won’t be guessing — you’ll have a clear roadmap for getting mortgage-ready and using your credit power to buy a home you can comfortably afford.”
Step 1: Understand What Lenders Look At
When you apply for a mortgage, lenders don’t just look at your credit score. They look at the whole picture of your finances to decide how much you can safely borrow.
- Credit score: Shows how you’ve handled debt in the past.
- Debt-to-income ratio (DTI): How much of your monthly income goes to debt payments.
- Down payment: How much you’re putting toward the home upfront.
- Income & employment: How steady and verifiable your income is.
- Savings cushion: Whether you’ll still have money left after closing.
A stronger profile — not just a higher score — gives you better loan options, lower interest, and more flexibility when it’s time to choose a home.
Step 2: Know Your Debt-to-Income Ratio (DTI)
Your DTI compares your monthly debt payments to your gross monthly income. Lenders use this number to decide how much payment you can realistically handle.
DTI formula:
DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income)
Example:
- Car payment: $350
- Credit cards & loans: $250
- Student loans: $200
- Total monthly debt: $800
- Gross monthly income: $4,000
DTI = 800 ÷ 4,000 = 20%
Many lenders want your total DTI (including the new mortgage) to be around 43% or lower, depending on the loan program.
Step 3: Understand the Main Types of Mortgage Loans
1. Conventional Loans
- Usually expect stronger credit scores (for example, 620+ in many cases).
- Good option if you have solid credit, steady income, and some savings.
- May offer lower monthly mortgage insurance if your score is strong.
2. FHA Loans
- Backed by the government, designed to be more flexible.
- Often allow lower scores and smaller down payments.
- Require mortgage insurance, which adds to the monthly cost.
3. VA Loans (for eligible veterans and service members)
- Often offer 0% down payment options.
- No monthly mortgage insurance, but there may be a funding fee.
- Powerful benefit if you qualify.
4. USDA Loans (for certain rural areas)
- Can offer 0% down in approved rural or semi-rural locations.
- Income and location restrictions apply.
There is no single “best” loan for everyone — there is a best fit for your situation. Your credit score, income, debts, and savings all work together to determine what’s possible.
Step 4: Get Mortgage-Ready (Timeline & Action Steps)
6–12 Months Before Applying:
- Make every payment on time — no late payments.
- Lower your credit card balances below 30% of your limits (ideally under 10%).
- Avoid taking on new major debts like car loans if possible.
3 Months Before Applying:
- Stop opening new credit accounts unless absolutely necessary.
- Review your credit reports for errors and correct anything inaccurate.
- Keep all accounts current and stable.
Ongoing:
- Build your savings for down payment and closing costs.
- Create or update a budget that shows you can handle the new payment.
If your credit is still in the rebuilding stage, continue working through the Advanced Credit Recovery Modules before you apply. A better rate on a mortgage can save you tens of thousands of dollars over time.
Step 5: Understand What’s in a Mortgage Payment
Your monthly mortgage payment is usually made up of several pieces:
- Principal: The part that pays down the loan balance.
- Interest: The cost you pay to borrow the money.
- Property taxes: Often collected monthly and paid by the lender once a year.
- Homeowner’s insurance: Protection for your home and belongings.
- Mortgage insurance (if required): Protects the lender if you default.
When you compare homes, don’t just look at the house price. Look at the total monthly payment to see if the home truly fits your budget.
Step 6: Common Mortgage Mistakes to Avoid
- Financing furniture, cars, or other big purchases during the mortgage process.
- Missing payments or paying late while underwriting is still reviewing your file.
- Making large unexplained deposits without documentation.
- Not asking questions when you don’t understand a fee or term.
The underwriter’s job is to double-check everything. Keeping your finances stable during this time gives you the best chance of a smooth approval and successful closing.
Mortgage Payment Calculator
Use this calculator to estimate your monthly mortgage payment, including taxes and insurance.