What the Mortgage Application Process Actually Involves

For many prospective homebuyers, the mortgage application can seem intimidating, particularly if it is the first time taking out a loan. Still, the process is far simpler than the old days of making photocopies and carrying stacks of paperwork around.

You will still need to gather a fair amount of documentation, including proof of income and credit information, but much of the application can now be finished online in just a few minutes, especially with an experienced lender walking you through it.

Even so, no two mortgages are exactly alike, and the application process can vary by lender and by loan type. Here is a closer look at what borrowers can expect when applying for a mortgage.

How the mortgage application process works

In a standard mortgage application, the process is generally straightforward. It begins with clicking an application link, submitting basic lead information, and entering details such as whether the loan is for a purchase or refinance, along with your name, location, Social Security number and income.

Based on that initial information, the lender will typically run a soft credit check and provide a preliminary loan amount for which you may qualify. At some point in this process, depending on the lender, you will usually be asked to create an account in the lender’s online portal. From there, you can upload any required documents if you choose to continue.

You will then need to supply supporting paperwork, which often includes recent pay stubs, W-2s, tax returns from the past two years and bank statements. Your lender will give you a full checklist of what is needed to complete the application.

After everything has been submitted, the lender reviews the file and may issue a preapproval letter, which offers a more precise borrowing estimate than a prequalification.

An underwriter then checks the information you provided and confirms whether the application meets the loan’s requirements. If everything checks out, the lender usually orders an appraisal, then moves the file toward closing. That is when you sign the final loan documents and pay any closing costs.

The process can become more involved with government-backed loans such as FHA loans, and even more complicated with specialized products such as VA mortgages, which carry additional service and documentation requirements. Borrowers stationed overseas or in the middle of a military move can face even more steps.

Most lenders now allow borrowers to finish the application online, which is the most common option among today’s applicants, according to Katie Rose, NMLS 860643, a senior loan officer with Veterans United.

“Most people like to do [the application] online because they don’t have to leave their house or they’re active duty and it’s difficult to go into a facility,” Rose says.

How applications differ from lender to lender

A mortgage application serves two main purposes: confirming who you are, and making sure you can handle the mortgage payment over time.

For that reason, every application asks for details about your job, income, assets, debts and credit. It also asks for information about the home you are considering, or the price range you are shopping in, plus basic personal details such as your name, Social Security number and contact information.

Even so, not every application is built the same way. Rose says the core information is usually similar from one lender to another, but the biggest difference is the technology built into the application.

“Some tools can link bank accounts and pull statements automatically, or upload documents right from your phone, so you’re not chasing down paperwork on your own,” Rose says. “Specialized lenders can often go a step further too. For military borrowers, that might mean verifying service-related eligibility automatically instead of tracking down paperwork yourself.”

Money reviewed the loan application processes of four national lenders: loanDepot, Veterans United Home Loans, Churchill Mortgage and Georgia’s Own Credit Union. Here is how they work:

loanDepot

The loanDepot application is a streamlined seven-step process that asks for personal information, property details, financial assets and other standard details commonly found in mortgage applications. It also includes secure bank linking, which lets the lender automatically pull bank and asset statements rather than requiring borrowers to scan and upload them manually.

The most notable part of loanDepot’s process comes at the end. Instead of simply entering information and submitting it, borrowers are shown a grid of loan offers. These display the loan options, terms, monthly payments and interest rates loanDepot can offer based on the information provided. Borrowers can then select the option that best fits their needs.

For veteran and military applicants, loanDepot also asks extra questions about military service and can pull the Certificate of Eligibility directly from the VA.

Veterans United

Veterans United specializes in VA loans, which are mortgages backed by the U.S. Department of Veterans Affairs. Because of that focus, its mortgage application has a military-specific design.

The lender has built an application intended to make the process faster and easier. Applicants provide information about pay, rank, years of service, branch, Permanent Change of Station orders and Expiration Term of Service dates.

Automation is one of the biggest advantages. Borrowers can connect their myPay account directly to the Veterans United myVU app, allowing the lender to access their Leave and Earnings Statement and bank statements within minutes instead of waiting for manual uploads. Veterans United also pulls the applicant’s Certificate of Eligibility directly from the VA, a step that can take several days with a non-VA lender.

After an application is submitted, a Veterans United loan officer typically reaches out within a couple of hours to finish planning the next steps.

Overall, the process is fast and efficient. It can be completed entirely online, although phone support is available if needed. The application took about 15 minutes in testing, and a preapproval decision may come in as little as 12 minutes.

Churchill Mortgage

Churchill Mortgage also offers a fast and streamlined mortgage application. The online process takes about 15 minutes, or slightly longer if a spouse or co-borrower is added, and requests similar information about housing history, personal details, property information, work history and more. Based on the information provided, a borrower works with a loan specialist to review options, which may include conventional, FHA and VA loans.

One notable feature of Churchill’s process is that after submission, borrowers are taken to a personal dashboard showing remaining tasks. From there, they can calculate payments, connect bank accounts, upload documents and track the status of the loan.

If you are seeking a VA loan, the application asks you to indicate military service and then enter the branch you served in and the length of service. That helps the loan officer determine whether a VA loan may be an option. If you select a VA loan, more details are requested. The application also asks whether you are a first-time homebuyer or have completed homebuyer education, since those answers can affect loan choices and pricing, according to a Churchill representative.

Georgia’s Own Credit Union

Georgia’s Own Credit Union offers a streamlined application for all of its loan products, but the FHA process was reviewed here. If you have all your paperwork ready, the application takes about 10 to 15 minutes.

The first step is through the credit union’s website, where borrowers answer four basic questions: whether they want to buy or refinance, their current debt, gross monthly income and state of residence.

Next, borrowers are asked whether they are a first-time or repeat buyer, along with the property address and ZIP code, home type, number of units, purchase price and down payment. With that information, the borrower receives an early estimate of the loan amount.

After a few more questions about credit score, military service, planned length of occupancy and whether the home will be a primary residence, borrowers are shown loan estimates for 30-year and 15-year FHA loans. They can also view estimated closing costs and see how the estimate changes if they choose to buy points to reduce the quoted rate.

If they select one of the options, they can begin the full application. That requires creating a credit union account, where they can securely upload documents such as pay stubs, W-2s and bank statements and monitor the loan’s progress. After submission, a loan officer will usually follow up within a day to discuss the next steps, including underwriting and scheduling an appraisal.

Common obstacles and ways to make the process smoother

Although applications vary somewhat by lender, mortgage professionals say several common problems show up again and again.

The biggest issue is documentation. No matter which lender you use, a mortgage application requires substantial paperwork to verify the information you provide. That can include tax returns, bank statements, pay stubs, investment account statements and retirement account records. If those documents are not organized before you apply, the process can slow down and underwriting may be delayed. Depending on market conditions, that delay could even cost you a lower interest rate.

“Documents seem to be the biggest hiccup,” Rose says. “If everybody’s got their documentation ready, it makes for smooth sailing.”

Physical copies are not always necessary, but digital versions should be easy to access before you begin.

“Know how to log into the various things. Your bank account or the payroll service that your employer uses, for example,” says Chris DeRuischer, home loan specialist at Churchill. “Can you log in and get a copy of your 401(k) statement? It might not all be requested, but just knowing the log-ins and having all of that organized is very helpful.”

A frozen credit report is another common stumbling block. Lenders almost always need to pull credit to review debts and understand how an applicant handles bills. If the credit is frozen, which is often done to help prevent identity theft and fraud, the application can come to a stop.

“It’s a pretty popular thing to do,” DeRuischer says. “If you have your credit frozen, you will need to go on the app with each of the bureaus, unfreeze your credit score, thaw those, and then we’ll be able to pull the credit report after that.”

DeRuischer suggests keeping credit unfrozen for at least 30 days, since most lenders will need to run credit again shortly before closing. That check is often done to make sure no major changes have occurred in debts or payment history since the application began.

Ray Hicks, another home loan specialist at Churchill Mortgage, says getting bogged down in small details can also slow things down. While applicants should always aim for the most accurate information possible, a few minor errors will not necessarily ruin the mortgage process.

“What I tell my clients when filling out their application is to do their best,” Hicks says. “They aren’t going to mess anything up. Of course, put in your correct personal info, but anything past that, if there’s an error, we’ll get it corrected on our end.”