The length of time it takes to get a mortgage approved depends on a wide variety of factors. A fast mortgage approval will take less than 30 days and a long mortgage approval can take almost 3 months. Here are the things that factor into how long it takes to get your mortgage approved:
Are You Working With A Direct Lender?
Are you dealing with a direct lender who will do everything in-house or are you working with a mortgage broker who will have to go through a third party? Going through a broker will take more time.
The Type of Mortgage You are Getting
What type of mortgage are you applying for? Is it a VA loan? An FHA loan? A conventional loan? Conventional loans typically take less time.
How Busy the Mortgage Lender is
How busy the bank is will also determine how fast you get your mortgage approved. Right now, many people are refinancing for lower rates and there is just not enough underwriters to go around. For faster mortgage approvals, try to look for homes in the winter time as that is the least busiest time for the real estate industry.
The Amount of Paperwork You Supply
If you want your mortgage approved fast, have all the paperwork ready even before they ask for them. This includes your recent paystubs, your W-2s from the last two years, your tax returns from the last several years, and documentation of any liabilities and assets you may have. And if you have any financial blemishes on your credit report, prepare to write a letter of explanation if they ask for one. An incomplete mortgage application can delay the process quite a bit.
The Down Payment Amount
The banks won’t think about it as much if you put down a substantial down payment. If your down payment is small, that means your mortgage will be bigger and so will your mortgage payments. Bigger mortgage payments will mean more risk to the mortgage lender.
Make sure you have minimal debt when applying for a mortgage. Conventional mortgages follow the 28/36 rule. They don’t like to see housing costs (mortgage payments in addition to homeowners insurance and property tax) being more than 28 percent of your gross income and they don’t like to see your total debt (housing costs plus other debt on your credit report) being more than 36 percent of your gross income. So even though conventional loans follow a 28/36 rule, you should definitely be following a 25/30 rule if you want a mortgage approved faster.
Having assets, especially liquid assets, is a very good thing. If banks see that your cash is depleted after the closing of the loan, that makes them worried. So the more money you have after taking into account the down payment and closing costs, the faster they will approve your loan.