Obtaining a Mortgage in Dallas: What to Know

The Dallas housing market is experiencing rising sales and sellers are in a position to choose which buyer’s offer is worthy of acceptance.  This offer selection process goes beyond just the offer price.  In this type of seller’s market, it is imperative that buyers have their financial house in order and are fully pre-approved with a Bank or lender.  While there are many factors surrounding each individual that go into whether or not you’re approved for financing, there are also many common principles to know that factor into pre-approval for a mortgage.

Here are some important factors in obtaining a mortgage in Dallas:

1. Down payment – Loan options vary with as little as 3.5% down, but to have access to all types of loan programs (FHA and conventional), a down payment of 5% may be required
2. Credit profile – Credit profiles consist of not only credit scores, but also things like recent payment history over the last 12 months and total outstanding debts.
3. Debt to income ratios (DTI) – DTI is what lenders use to determine how much someone can borrow to buy a home.  The general target for a DTI is 43% or less and is calculated by taking the overall monthly debt obligations including the new monthly housing payment and dividing by the total monthly pre-tax income.
4. Cash reserves – Reserves are used to support loan qualification by showing how many months of housing payments are leftover in savings/retirement after contributing funds for down payment and closing costs.  For example, if the housing payment is $2,000 per month and there is $50k left in savings after closing, there would be roughly 25 months reserves remaining.
5. Employment history – Consistency across your employment is an important factor in your loan approval.  A 2 year history of employment in the same line of work is typically required.  This doesn’t necessarily mean employment with the same company, but if employment has changed, most lenders will require documentation about how the general job tasks, required training, and compensation type show consistency over multiple years.

By no means do these factors cover all components of loan approval, but they at least act as a general guide to knowing potential options to get pre-approved for a home loan.  If you’d like to learn more about obtaining a mortgage in Dallas, we’d love the opportunity to help you with pre-approval and invite you to call and talk to a seasoned mortgage professionals at 972-499-0454 or get started with online pre-approval.  We look forward to helping you.