How to Get a Mortgage: A Step-by-Step Guide

Preparing to buy a house? It’s not easy, but millions of people buy homes every year. With the right guidance, you’ll find a wonderful home with a payment you can afford. This article covers everything you need to know about how to get a mortgage loan.

Mortgage process overview

When buying a home, you’ll typically walk through the following steps:

1. Review your finances
2. Estimate how much house you can afford
3. Choose a mortgage lender
4. Get pre-approved for a mortgage
5. Make an offer, get final approval and close

Take a look at your budget

Now’s the time to assess your income, debt and monthly expenses. Once you’ve made all your payments, ask yourself:

• How much do you have left over?
• How much do you currently pay for housing?
• Do you have money in savings?

Any extra money in your budget could go to savings for a down payment or towards a monthly mortgage payment. Whatever you currently pay for housing can go towards a mortgage payment as well.

You’ll need enough savings to make a down payment and still have some left over. Owning a home includes costs like maintenance and repairs that you’ll have to cover yourself. Keeping an emergency fund of 3-6 months of expenses will set you up for success.   

If you don’t have a budget already, use a simple digital budgeting app to get started.

Check your credit

Your credit score is a number that represents how likely you are to repay borrowed money. Mortgage lenders use this score to determine your loan eligibility and interest rate. The higher your score, the better.

How to check your score

You can get a free estimate of your credit score through services like Experian or myFICO. Once you apply for a loan, your lender will check your official score. There may be a fee.

What’s a good credit score?

Credit scores range from 300 to 850. Don’t worry if you score isn’t perfect. You can always work to bring it up.

For conventional loans, many lenders want a score of 620 or higher, though requirements vary. Government-backed loans (like FHA) may allow lower scores, but often with additional requirements.

What if you don’t have a credit score?

It is possible to buy a home with no credit score at all, but you’ll have to meet different requirements. Speak with a mortgage loan originator to determine if a no-score loan is right for you, or if you should start building credit.

First-time homebuyer savings accounts

If you’ve never bought a home before, consider opening a first-time homebuyer savings account like Horizon’s HomeStart Savings. Depending on the program, these accounts offer benefits such as higher interest rates, tax-free growth and lender credits.

To get a more accurate, detailed estimate, it’s best to speak with a licensed mortgage loan originator. This step is sometimes called pre-qualification.  It’s different than pre-approval (more on that below). By talking to a mortgage loan originator, you may find that you can afford more—or less—than you expected.

Typically, an initial consultation is free and won’t commit you to working with that particular lender.    

How much do I need for a down payment?

Buyers often assume they need a very large down payment to purchase a home, but that’s not always the case. Some loan programs require as little as 0% to 3.5% of the home price. The exact amount depends on the program, lender requirements and your financial profile.

What is a down payment?

A down payment is the portion of the purchase price you pay upfront when you get a loan. It shows the lender you are sharing the financial risk and reduces the amount you need to borrow. A down payment is separate from closing costs.

Down payment assistance (DPA) programs

Down payment assistance programs can help reduce your up-front costs. Each program has its own rules, income limits and eligibility requirements. Ask your local lender to see if there are programs in your area that you might qualify for.

Understanding your monthly mortgage payment

Let’s look at the main components that make up a monthly mortgage payment.

• Principal: The amount of money you borrow from the lender. Over time, as you pay down the principal, you build equity in your home.
• Interest: The cost of borrowing money. It’s what the lender charges you in exchange for the loan.
• Homeowners insurance: Homeowners insurance protects your home against unexpected events like fire, storms or theft.
• Property taxes: Property taxes are charged by your local government. They help fund community services like schools, roads and emergency services. Property taxes are often included in your monthly mortgage payment through an escrow account.
• Private mortgage insurance (PMI): Private mortgage insurance is typically required if your down payment is less than 20% of the home’s purchase price. Once you build enough equity, you may be able to remove PMI.
• Homeowners association (HOA) fees: An HOA sets and enforces community standards for property appearance, maintenance and common spaces. If your home is in a neighborhood with an HOA, you’ll typically pay monthly or quarterly fees to help cover costs.

How much are closing costs?

Closing costs are one-time fees you pay when you finalize your home purchase or refinance. They do not include your down payment. Closing costs typically range from 2% to 5% of the loan amount.

Here are a few common closing costs:

Lender fees

These are fees charged by the lender to process and underwrite your loan. They may include application fees, origination fees or other administrative costs. Lender fees typically range from 1% to 2% of the loan amount.

Title insurance

Title insurance protects you and the lender in case there are ownership disputes or legal claims against the property. It helps ensure the home legally belongs to you.

According to the Consumer Financial Protection Bureau (CFPB), title insurance typically range from 0.5% to 1.0% of the purchase price of a home.

Appraisal fees

A home appraisal is almost always required when purchasing or refinancing a home. Your lender will coordinate the appraisal with a professional appraiser. Typically, you (the borrower) will pay for the appraisal.

In the areas Horizon serves, home appraisals typically cost between $500 to $750 dollars as of 2026. Yours could cost more or less depending on the context.

Visit themortgagereports.com for a more extensive list of closing costs.

Personalized guidance and support

A good lender will guide you through the mortgage process from start to finish. They’ll take time to help explain loan options, answer your questions and walk you through the documentation you need. Even experienced buyers can benefit from a lender’s expertise on current programs and interest rates.

One sign of a trustworthy lender is clear and consistent communication. When you’re closing on your home and the pressure’s on, you’ll want a lender who will pick up the phone when you need them. 

Shopping around

It’s a good idea to compare multiple lenders before choosing one. Look for transparency regarding mortgage rates and fees and loan terms that match your financial situation. Getting quotes from a few lenders can help you find a mortgage loan that’s right for you.

In-house underwriting

In-house underwriting—as opposed to outsourcing—enables direct, effective communication between your lending team and underwriters. This often means faster decision-making and fewer delays, which helps to keep your home purchase on track.

Horizon offers in-house underwriting for all mortgage loans.

Why get pre-approved?

Getting pre-approved shows sellers that you’re ready to buy and can follow through on an offer. Sellers are more likely to accept an offer from a pre-approved buyer.

It also gives you a definitive budget. You’ll know exactly how much house you can afford, and that will help you narrow down your search.

The pre-approval process

To get pre-approved, you’ll have to submit a mortgage application and supporting financial documents. A lender will want to see proof of income, tax returns, banks statements, employment history and photo ID. You’ll also authorize the lender to pull your credit report. It may take a few weeks to process your information and issue an approval.

Depending on the lender, pre-approvals only last 30 to 120 days. If you don’t buy a home within that time range, you’ll have to go through the process again.

Pre-qualification vs. pre-approval

Pre-qualification is when a mortgage loan originator reviews your finances and provides a rough estimate of how much you can afford. It’s a starting point, but it doesn’t guarantee anything.  

Pre-approval, on the other hand, is a formal statement from the lender about how much they are willing to lend you. If you’ve been pre-approved for a certain loan amount, you can count on receiving that money from the lender.

Pre-approval can be revoked if your financial situation changes dramatically or other issues arise, but it’s not likely.

Types of mortgage loans

Usually, pre-approval is only valid for a specified type of loan. A licensed mortgage loan originator can help you find the best loan for your unique needs. Each type of loan has different requirements, benefits and ideal use cases.

Conventional loans

These loans are offered by a private lender such as a bank, credit union or mortgage company. Conventional loans are the most common type of mortgage and often have competitive interest rates. They typically require good credit and a down payment of at least 3% to 20%.

Government-backed loans

Government-backed loans are mortgages insured or guaranteed by a federal agency. Because the government reduces the lender’s risk, these loans often have lower down payment requirements and more flexible credit standards.

• FHA loans are insured by the Federal Housing Administration. They usually have flexible terms and may require less for a down payment.

• VA loans are only available to eligible veterans and active-duty service members. They often require no down payment and no private mortgage insurance.

• USDA loans are for homes in qualifying rural areas. USDA loans do not require a down payment and often have low interest rates.

Jumbo loans

Jumbo loans are used are used for expensive homes that you can’t buy with a conventional loan. They require higher credit scores, larger down payments and more documentation.

Manufactured home loans

As the name suggests, these are loans for prefabricated or manufactured homes. Requirements vary depending on whether the home is on a permanent foundation and whether land is included in the purchase.

Land loans

Land loans are designed for buyers who want to purchase land and build in the future. Requirements vary depending on whether the land is undeveloped or improved.

Other loans

Some lenders, like Horizon, offer specialized loans such as 0% down loans and medical professional loans. They offer flexibility for people in unique financial situations.

Making an offer

Making an offer can feel intimidating, but not if you have good guidance. Your real estate agent and lender can help you determine a fair price, and if you’re pre-approved, you’ll know how much you can afford.

Sometimes, a seller will accept an offer right away. Other times they’ll decline, or you’ll have to negotiate through your realtors.

Inspection and appraisal

Before your loan is finalized, it’s a good idea to get an inspection. The inspection identifies any potential issues with the property, such as plumbing, electrical or structural concerns. If any major problems are found, you can choose to negotiate with the seller or withdraw your offer.

Most lenders require an appraisal, which is different than an inspection. An appraisal confirms the home’s market value to protect you and the lender.

Final underwriting review

After the inspection and appraisal, your lender completes a final underwriting review. The underwriters will verify your finances, the property and all documentation. If everything checks out, your loan will be approved for closing.

Closing day

Closing day is when the home officially becomes yours! You’ll review and sign all the necessary documents, pay your down payment, fees and closing costs. Once everything is signed and recorded, you’ll get the keys and can move into your new home.

Ready to get started?

Horizon’s friendly mortgage loan originators are excited to help you buy your dream home. With local knowledge and years of experience, they’re sure to get you on the right path. Speak with a mortgage loan originator today!