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How Hard Is It To Get a Pre-Approval Right Now? Scale of 1 to 10

How hard is it to get pre-approved

You want to know if you can get pre-approved to buy a home, but you think it's impossible to be approved.

Exactly how hard is it to get a pre-approval in today’s market?

Mortgage Application Difficulty Scale, 10 Being the Worst

Let’s look at your chances as an applicant on a scale of 1 through 10 – 10 being the worst – with this completely unscientific and opinion-based review of mortgage difficulty.

Income Verification: Salaried - 1

Proving your income as a W2 employee is quick and easy. Sometimes you don’t even have to supply your pay stubs and W2s. If you work for a medium to large company, the lender can likely request a verification of employment directly from a third-party service that details your income history. You usually don’t have to supply tax returns as a full-time salaried employee.

Income Verification: Self-Employed - 4

It will be more painful for self-employed individuals to verify their income, but it’s still relatively easy as long as you make enough post-expense income. Common problems for self-employed individuals are a lack of two full years of filed tax returns and not making enough “on paper” after writing off expenses. Turn in your two most recent years of personal and business tax returns to the lender for a full review.

Related: 7 Things To Bring To Your Mortgage Pre-Approval Meeting

Funds to Close - 4

Verifying assets is easy. Typically you need a 60-day history of all savings, checking, investment, and retirement accounts. Often, a modern lender can tap into your accounts directly – with your permission – using third-party services.

But saving is difficult, hence the higher rating. Rising inflation, high rents, and bigger home prices make it hard to save enough even for a small down payment and closing costs. Even with only 3% down, you could be out-of-pocket $20,000 on a $300,000 home.

Credit - 3

To pull a credit report, the lender needs your name, social security number, two-year address history, and authorization to pull credit. The whole process takes just minutes.

As far as the score itself, many lenders offer loans to applicants with scores down to 580 or less, making this one of the simpler aspects of qualifying for a mortgage.

Qualification Standards - 4

While lending standards have tightened since the early 2000s, they are not overly restrictive. You must fully document income and assets, get an appraisal, and meet other reasonable requirements.

But agencies like Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development (HUD) have loosened guidelines to help those with a wider range of incomes and credit scores to qualify for a home. You might be surprised that you now qualify to buy a home even if you were denied a few years ago.

Mortgage Rates - 7

This is where things get a bit harder. Home affordability was historically favorable from about 2009 to early 2022. Then rates went from near 3% to over 7% in 10 months. While 7% rates seem astronomical, the average 30-year mortgage rate since 1971 is 7.73%, according to Freddie Mac data. Mortgage rates aren’t a “10” on our scale because they are quite normal from a historical perspective. However, the thing that isn’t normal is home prices in combination with these rates.

Home Affordability - 8

Home affordability is in the “quite painful” range at the moment.

Affordability looks at more than just home prices. It factors in average incomes and mortgage rates, too.

Looking at the complete picture, affordability is significantly lower than in 2019, often considered a normal housing market.

In 2019, someone putting 10% down would spend less than 30% of their income on a house payment. Fast forward to 2024, and it’s 41%. That payment covers principal and interest only. It doesn’t count property taxes and homeowners insurance, both of which are rising quickly, too.

March 2019

March 2024

Average Home Price*

$322,700

$417,700

Average Rate**

4.31%

6.88%

Payment***

$1,439

$2,471

Average Income****

$4,818

$6,012

% of Income for Payment

29.8%

41.1%

* U.S. Census Bureau **Freddie Mac ***10% down 30-year fixed rate mortgage ****BLS average hourly wage x 2080 / 12.

Overall monthly home affordability is one of the biggest challenges to homebuyers today. But there’s another: home inventory.

Home Inventory - 8

While low home inventory doesn’t make it harder to get pre-approved, it does make using your pre-approval more difficult.

For example, pre-approvals are good for about 90 days. Then you must get re-approved to keep looking for homes.

Home inventory is so low in some markets, it could take six months or longer to receive an accepted offer. Nationwide, there were nearly 1.5 million homes for sale in the U.S. in 2016, says Realtor.com. As of March 2024, that number has fallen below 700,000.

Lender Capacity - 1

In 2021, it may have been hard to find a lender to work on your pre-approval quickly. Today, lenders aren’t very busy. Nearly any loan officer should be able to give you personalized attention and send your pre-approval letter fast.

Overall Homebuying Difficulty - 6

Buying a home isn’t the hardest it’s ever been, but it’s not the easiest, either.

The good news is that you can overcome many of the above obstacles with some planning.

Contact a lender who can put a plan together so you can buy a home soon.

Find lenders here.

About The Author:

Tim Lucas is the editor and Lead Analyst for MortgageResearch.com. Tim spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. He has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.

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