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For most Americans, securing a mortgage loan is the key to being able to purchase a home. While the odds of approval can depend on the state you’re in, with Minnesota offering the best chances as NerdWallet found when analyzing data from the Home Mortgage Disclosure Act database for each state, whether you plan to buy a home in Minneapolis or one of the houses for sale in Indianapolis, there are steps you’ll need to follow to get pre-approval.

Getting Pre-Approved

Getting pre-approved means the lender will verify your information and documentation to determine how much it’s willing to lend. The documents you need to obtain a mortgage and the same documents you’ll need to get pre-approved.

How’s Your Credit?

Getting an FHA loan approved typically requires a credit score that’s at least 620, although the higher the better as the lowest interest rates are typically given to those with a minimum score of 740.

The first thing to think about before going into the pre-approval process is your credit score. Getting an FHA loan approved typically requires a credit score that’s at least 620, although the higher the better as the lowest interest rates are typically given to those with a minimum score of 740. If your score falls between 620 and 740, you’ll probably have to pay a higher interest rate. If it’s below that range, your best bet is to work on improving your credit first – otherwise, you either won’t be approved or you’ll have to come up with a large down payment.

Gather Documents to Verify Income and Employment

All borrowers must be able to prove they have sufficient income to make the payments on their mortgage loans. This step will be the easiest for those who earn a steady paycheck from one source, providing W-2 forms from the past two years. Bring your pay stubs as well as proof of any additional income, like bonuses and/or overtime. You may need copies of your two most recent federal and state tax returns as well. The lender may also call your employer to check your salary and confirm that you’re still employed.

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If you’re self-employed, you’ll need proof of that income such as tax returns and the Form 1099s you used to report income to the IRS. There may be other documents required as well.

Bring Proof of Assets

Proving your assets typically includes copying 60 days of statements for each bank account with assets you want to use to qualify for the mortgage. If you have CDs, investment accounts and/or IRAs, you’ll need two months of statements from those as well.

Other Documents

In addition to a taking a copy of your driver’s license and obtaining your social security number, if you’ve been a renter, you’ll need to provide the lender with the contact information for your landlords over the past two years and also show rent payments for the previous 12 months. If applicable, documents such as a divorce decree as well as court orders for alimony and child support, will be necessary.

Be aware that you’ll have to show sources of the money you plan to use for a down payment. If someone plans to gift all or part of the money to you, a gift letter signed by the giver stating that you won’t have to pay it back may be required as well.

Eric Adamczyk