What is typically the first step in qualifying for a mortgage loan?

The first step in qualifying for a mortgage loan is typically the pre-qualification process. During pre-qualification, a lender assesses the borrower's overall financial situation to determine how much they might be eligible to borrow. This process often involves a preliminary evaluation of the borrower's income, debts, and credit history, although it may not require extensive documentation at this stage.

Pre-qualification serves as an initial step that helps guide borrowers in understanding their budget and the price range they can consider for purchasing a home. It gives both the borrower and the lender a clearer picture of what to expect moving forward in the mortgage process. This process can also help identify any potential issues that could affect the borrower's ability to qualify, allowing them to address these before proceeding further.

Other steps, such as credit report evaluation, appraisal, and loan underwriting occur later in the mortgage process. After pre-qualification, the lender will conduct a more in-depth credit report evaluation to get an accurate assessment of the borrower's creditworthiness. Additionally, loan underwriting is a later stage that involves more thorough checks and is finalized after a home has been selected and the application formally submitted.