Steps for Working Toward Mortgage Approval

People who may not qualify for a mortgage now can take steps to increase the chances of being approved within a year or two. Preparing finances to apply for a mortgage will help those who have zero credit history, are self-employed, or have poor credit. There are several websites that include guidelines, suggestions, and explanations regarding mortgage approval criteria.

No Credit History

People who do not have an established credit score may have difficulty being approved for a mortgage. That hardly seems fair, but a high credit score indicates to lenders that applicants make payments on time and in full. A car loan with no late or missing payments, credit cards that are paid off quickly, and even consistent payments on student loans shows the applicant is at low risk of defaulting.

One simple step is to apply for a major credit card and make a few purchases with it. Pay off the total amount due at the end of each billing period to establish a favorable credit score. Purchase essentials, such as groceries or gasoline, that will not strain the budget. Use that money to make the payments and mortgage approval will be likely.

Poor Credit History

Obtain a copy of the credit report and address any issues that adversely effect the total score. Begin paying off all current debt so there are no credit card balances, no late utility payments, and nothing outstanding. Rebuilding a positive credit history takes some time, but is not impossible.

Some lenders will approve mortgages for those who are rebuilding their credit. Be aware that the interest rate will be higher due to increased risk on the part of the lender. People interested in rebuilding their credit or applying for a bad credit mortgage can discover more here.


Because approvals basically come down to risk, those who are self-employed may be denied a mortgage. The underlying concern is that business is not guaranteed and income with fluctuate drastically. People will need to demonstrate that the income has been steady for a long period of time, such as five years.

Another way to work toward mortgage approval when self-employed is to have a significant down payment for the purchase of a house. Not all homeowners had ideal circumstances when they were approved for their mortgage. There are alternatives to renting forever.