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Everything Required for a Mortgage Pre-Approval in Texas
Jennifer Hernandez • September 27, 2022
A mortgage loan is likely going to be the biggest loan that you take out in your lifetime. In the United States, the average mortgage loan in 2020 was $208,185.
Due to the significant amount of money at stake, lenders go through a much more thorough review process before simply signing off on a borrower's request. One way to expedite the home buying process is by having a valid pre-approval that has been obtained within 6 months. This will not only help you have a peace of mind, but will enhance your chances of having a successful home buying experience! One last important detail to note, is that a pre-qualification differs from an actual pre-approval. Here is a video where I have explained the two differences.
A pre-qualification is a review of credit only, while a pre-approval additionally reviews income, assets and special circumstances. Are you wondering what documents you will need to get pre-approved in Texas?
Get pre-approved for a mortgage in Texas with our guide!
Mortgage in Texas Guide!
1. Good Credit Can Help Pre-Approval
One of the first things that is crucial to pre-approval is to build up your credit score. The lender must verify if you meet the minimum standards for loan programs available to you. Credit score also greatly impacts the final interest rate.
A credit score measures how adept you are at paying your bills on time, while also avoiding excessive debt. There are many factors that are considered in the score, like percent utilization on credit cards, late payments or collections, number of open accounts, time since accounts opened, and inquiries into your credit.
Conventional loans require a minimum of a 620 credit score . The most ideal score, to obtain the most favorable interest rates, are scores 740-850. FHA loans have minimum credit scores of anywhere from 580 to 620, depending on the particular lender. Not all lenders are accepting lower scores, so be sure to check with your local lender(s).
If you suspect that your score is not meeting the standards listed above, you can take action now. Sign up for a credit reporting service. There are free ones, however the ones with a monthly fee generally are more robust and helpful. In my experience, www.myfico.com is the scoring system that most closely resembles credit scores that lenders obtain.
2. Your Income and Pre-Approval
The next thing that you will need to get pre-approval is to have proof of your monthly income. Income can be derived from many different sources, depending if you are employed, self employed, or retired. For employed borrowers, we will require at least 1 recent month of paystubs from your employer, showing year to date earnings as well.
For self employed borrowers, a 2 year history of both personal and business tax returns is generally required. If you receive other sources of income such as pensions, social security, disability, child support, alimony, or dividends and interest, we will request to show that it generally has been received for at least 2 years, and is likely to continue for 36 months.
There are exceptions to the 2 year history rule, and one of them is college education. Simply show your recent transcript or diploma, and the 2 years employment history should not be required. Reviewing income usually involves other questions such as gaps in employment, or a decline in income. If these circumstances apply to you, be prepared to explain and possibly document during the pre-approval process.
3. Why Your Assets and Reserves Matter in Pre-Approval
Assets are another crucial component of the pre-approval process. Verifying that you have funds for closing, and the source of those funds, will be required. A common question I get is if ALL the funds need to be in your possession prior to pre-approval. Not necessarily. Just let the lender know what future deposits might be, and they can consider the approval subject to the receipt of those monies. Bank statements for two months is required to show proof of funds. These can be checking accounts, savings, money market, retirement, stocks, etc. The lender will be reviewing for large deposits, and the source of those monies. If you have large amounts that were not from your paycheck, expect them to ask for proof of where the funds came from. Like the sale of something, or another account that transferred, a gift from a family member, are some of the most common.
Cash is not an acceptable source of deposit for lenders. What they are trying to prove, or disprove rather, is that you do not have any other debts or loans required to be repaid. Cash is not able to prove that. So beware! Also note, that any funds are considered seasoned after 60 days. Since lenders only ask for two months statements, they would not question not likely see a deposit from 90 days ago.
One last comment on assets. It's always a good idea to list as many accounts as you have available. You're pre-approval could be enhanced with what lenders refer to as RESERVES. These are monies remaining in your account after closing, that could be essentially used in case of a future job loss, in case you need to make your mortgage payment on time!
Download our free checklist on all documents required to get pre-approved here!
4. Tax Documents Needed for Pre-Approval
Two years history of employment is required for loan approval . For this reason, lenders ask for 2 years of W2 forms for employed borrowers, and if you are self employed , which means you own your own business, then 2 years tax returns for both personal and business will be required. There are exceptions. Conventional loan programs allow just 1 year, if the business is 5 or more years in existence. In addition of employed borrowers, recent college studies in most cases avoids the need for a 2 year history of employment.
5. Your Debt to Income Ratio
Depending on the program you are applying for, there are debt to income ratio requirements that lenders adhere to.
FHA loans, secured by the Federal Housing Administration, are the most lenient on debt ratios. The maximum allowable is generally 55% of your gross monthly income. However, this amount could be reduced, if there are other factors such as low credit score or low reserves as we mentioned in the previous section.
A Conventional loan has requirements that are more strict. The maximum debt to income ratio is 43-45percent for down payments less than 20 percent. If you put 20 percent down or more, you might get approval up to 50 percent of your gross monthly income. Loans with 20 percent down, if they are to be approved near the 50 percent debt to income range, should have other compensating factors such as a high credit score, or large number of reserves as mentioned above.
Get Pre Approval for Your Mortgage Loan
These are five of the most important factors when it comes to getting pre-approved for a mortgage loan in the great state of Texas. Make sure you have good credit, limited debt, good assets, and proper income documentation.
Do you want to be pre-approved to buy a home in Texas? Message us today at Loan With Jen to see how we can help you get started!
Your credit score is the key to unlocking your financial future. Understanding how it’s calculated can help you make better financial decisions and avoid costly mistakes. Many people find their credit score to be a mystery—sometimes it drops even when they make payments on time! If you've ever been frustrated by fluctuations in your score, this guide will break down the five key components of your credit score so you can take control and boost it effectively. Why Your Credit Score Matters Your credit score is a three-digit number that reflects your financial responsibility to creditors. It affects everything from securing a mortgage or auto loan to getting approved for credit cards and even determining your interest rates. The better your score, the more favorable your loan terms— lower interest rates, smaller deposits, and better financial opportunities . In fact, 90% of lenders use FICO scores as their primary credit evaluation tool ( source ). But how exactly is your FICO score calculated? Let’s break it down. The 5 Components of Your Credit Score 1. Payment History (35%) – Never Pay Late! Your payment history is the most important factor in your credit score. It includes: On-time vs. late payments (payments that are 30+ days late are reported to credit bureaus) Collections and charge-offs Bankruptcies or foreclosures 🔹 Pro Tip : Always pay at least the minimum payment by the due date. Setting up auto-pay can help prevent accidental late payments. If you’re struggling, reach out to creditors to discuss payment plans before you fall behind. 📌 More on improving your payment history: How Late Payments Affect Your Credit Score 2. Credit Utilization (35%) – Keep Your Balances Low Your credit utilization ratio refers to the percentage of available credit you’re using. High utilization can hurt your score, even if you pay your balance in full each month! 🔹 Best Practice : Keep your credit card balances between 10-30% of your credit limit. For example, if you have a $5,000 limit, don’t carry a balance higher than $1,500 at any time. 🔹 Secret Tip : Your balance is reported to the credit bureaus on your statement closing date , NOT when you make a payment. If you pay your credit card bill before the statement closing date, you can lower the reported balance and improve your utilization ratio. 📌 More on credit utilization: Mastering Your Credit Score 3. Length of Credit History (15%) – The Longer, the Better Credit bureaus consider how long your accounts have been open. Older accounts demonstrate stability and reliability . 🔹 Best Practice : Avoid closing old credit accounts, even if you don’t use them often. Keeping them open helps maintain your average account age . 📌 More on the importance of credit history: How are Credit Scores Made? 4. New Credit & Inquiries (10%) – Be Careful with Hard Pulls Every time you apply for credit, a hard inquiry is recorded on your report, which can slightly lower your score. Applying for multiple credit accounts in a short time signals to lenders that you may be in financial trouble. 🔹 Best Practice : Keep new credit applications to a minimum and only apply when necessary. 🔹 Good to Know : Soft inquiries (like checking your credit score on your own) do not affect your credit score! 📌 More on credit inquiries: Does a Hard Enquiry Damage My Credit Score? 5. Credit Mix (10%) – Variety Matters Having a healthy mix of credit types boosts your score. Lenders like to see that you can manage different types of credit responsibly . A strong credit mix includes: Installment loans (e.g., mortgages, auto loans, student loans) Revolving credit (e.g., credit cards, home equity lines of credit) 🔹 Best Practice : If you only have one type of credit, consider adding another responsibly (e.g., opening a credit card if you only have loans). 📌 More on credit mix: How Your Credit Mix Affects Your Score
Does a Hard Inquiry on Your Credit Really Hurt Your Score? If you're planning to buy a home in Texas, you may be wondering: Does a hard inquiry on your credit really damage your score, and how will it affect your chances of mortgage approval? Let's break down what a hard inquiry is, how it impacts your credit, and strategies to minimize its effect so you can confidently move forward with your home purchase. What is a Hard Inquiry? A hard inquiry occurs when a lender checks your credit report to assess your creditworthiness for a loan, credit card, auto loan, or mortgage. Unlike soft inquiries (which happen when you check your own credit or when a lender pre-qualifies you without a formal application), hard inquiries are recorded on your credit report and may impact your credit score. Inquiries remain on your credit report for up to two years , but the good news is that FICO scoring models (used by 90% of lenders) only consider them for one year. This means that while the inquiry stays visible on your report, its impact on your score diminishes after 12 months. How Hard Inquiries Affect Your Mortgage Approval A hard inquiry alone is unlikely to prevent you from getting pre-approved for a mortgage. However, here’s what you need to know: FICO Treats Multiple Mortgage Inquiries as One: If multiple mortgage lenders pull your credit within a 30-day window , it only counts as one inquiry for scoring purposes. This allows you to shop for the best mortgage rates without penalty. Other Inquiries Can Hurt Your Score: While mortgage inquiries are grouped together, applying for credit cards, auto loans, or personal loans during the same time frame can lower your score. Impact Depends on Your Existing Credit Score: If your credit is already strong (e.g., 700+ score ), a hard inquiry may have a minimal effect—think of it as a small “peck” on a steel building. However, if your credit is already struggling, an additional inquiry could have a more noticeable impact. 👉 For a deeper dive into credit scores and mortgages, check out Loan with Jen’s guide on mortgage pre-approvals .
Did you know that paying off a collection won’t help your credit score unless it gets deleted ? That’s right! Collections don’t automatically disappear from your credit report, even if you’ve settled the debt. If you’re planning to buy a house or improve your credit, removing collections can be a game-changer. In this guide, I’ll walk you through six proven steps to delete collections from your credit report forever , plus a bonus hack that might speed up the process. Follow these steps carefully, and you could see your credit score improve significantly! Why Collections Hurt Your Credit Score A single collection—whether it’s $10 or $5,000 —can drop your credit score by 100 points or more overnight. Your credit score affects more than just home loans. It impacts: Your ability to qualify for a mortgage Your interest rates on car loans and credit cards The deposit amount for utilities like electricity and internet Having a collection on your report can cost you thousands of dollars in extra interest over time. That’s why it’s crucial to remove them the right way . Step 1: Get Your Full Credit Report Before you start, you need to know exactly which collections are reporting and to which credit bureaus . Where to pull your credit report: AnnualCreditReport.com (Free once per year) MyFICO.com (Paid but gives accurate FICO scores, which mortgage lenders use) Pro Tip: Make sure you get reports from all three bureaus ( Experian, TransUnion, and Equifax ) since not all creditors report to every bureau. Step 2: Identify the Collections & Calculate Your Offer Once you have your report, write down all open collections (not charge-offs). Keep track of: Collection company name Amount owed Contact phone number Now, add up the total amount owed and calculate 50% of that number . This will help you negotiate later. For example: If your collections total $2,000 , set aside $1,000 for settlements. Having funds ready before negotiating gives you leverage to settle immediately when the time comes. Step 3: Research the Collection Agency Not all collection agencies have the same policies. Look up the collection company online to see if they offer Pay-for-Delete (PFD) agreements. This means they will remove the collection once you pay . If the company is PFD-friendly, mark them as a priority! Step 4: Call the Collection Agency & Negotiate This is where your sweet voice comes in! Be polite, professional, and never argue . Follow these steps: Call the collection agency directly (no emails or texts!). Ask for a settlement : Start by offering 20-25% of the balance. Negotiate : If they counteroffer, work towards 50% or less . Ask for Pay-for-Delete : Say, "If I settle today, will you delete this from all three bureaus?" Get it in writing : Before paying, request a written agreement confirming deletion . If they refuse Pay-for-Delete , do not pay . Keep calling back until you get an agent who will agree. Step 5: Make Your Payment & Track It Once you receive a written confirmation , pay the settlement amount using a traceable method like: Credit/debit card Online payment portal (if available) Check or money order (with proof of payment) After paying, follow up with the collection agency to confirm when they will notify the credit bureaus. Most agencies report once per month , so expect deletion to take 30-90 days .
This information could save you thousands of dollars. Not all credit scores are FICO scores, and to complicate things even further, there are over three dozen versions of FICO ! If you’re planning to buy a home soon and are concerned about your credit score, keep reading—I’m breaking down the real facts. No fluff, just the essential details you need to know. The Credit Score Surprise As a mortgage loan officer with nearly three decades of experience , I’ve seen it all. Every week, I ask new clients what they think their credit score is. Without fail, the number they provide is different from the actual score I pull. Sometimes it’s just a few points off, but I’ve also seen differences of 100 points or more ! Why does this happen? Credit scores are highly individualized, and not all scores are calculated the same way. Here’s the good news—I’ve been pulling credit reports since mortgage companies began using FICO scores. I’ve learned how to navigate this complicated world, and I’m here to share what you need to know. What Is a FICO Score?
If you’re planning to buy a home in the next 12 months, understanding your credit score is essential. Not all lenders use the same credit scoring system, and the score you see from your credit card company may differ significantly from what mortgage lenders use. About 90% of lenders rely on FICO scores , but what exactly is FICO, and why is it so important? In this post, we’ll take a journey through the history of FICO and credit reporting, explain why not all credit scores are created equal, and give you practical tips to improve your credit score for home buying success. What Is FICO, and How Did It Start? To understand FICO, we need to take a step back into history. FICO (Fair Isaac Corporation) wasn’t always the gold standard for credit scoring. Its roots go back to 1956 as a data analytics company that specialized in building algorithms for various industries. But credit reporting actually started before FICO got involved, it began much earlier—back in the 1800s . The Birth of Business Credit Reporting In 1841 , a company called The Mercantile Agency began collecting and recording data on businesses, providing valuable information to creditors. This company later rebranded as Dun & Bradstreet , which remains a major player in business credit reporting today. While businesses were being tracked and scored, there was no system in place for consumer credit. That changed in the early 1900s . The Evolution of Consumer Credit Reporting In Atlanta, The Retail Credit Company (RCC) emerged in the early 1900s, collecting extensive data on individual consumers. Unfortunately, they went too far—gathering private personal information, including political affiliations and even racial and sexual details. The U.S. government stepped in to regulate this overreach by enacting the Fair Credit Reporting Act (FCRA) in 1970 , which established rules on how consumer credit information could be collected and shared. Feeling the heat from the new regulations, RCC rebranded as Equifax , one of the three major credit bureaus we recognize today, along with TransUnion and Experian . By the late 1980s , these agencies were struggling to make sense of the growing mountain of credit data. They needed a standardized system to interpret creditworthiness—so they partnered with FICO . How FICO Became the Standard for Credit Scoring In 1989 , FICO introduced its credit scoring system, which quickly became the industry standard for evaluating credit risk. FICO’s algorithm turned complex credit data into a simple three-digit score, making it easier for lenders to assess borrowers' trustworthiness when it came to paying back debt. Today, FICO is used by about 90% of lenders , although there are dozens of FICO models , each tailored to different types of lending (e.g., auto loans, credit cards, and mortgages). Why Your FICO Score May Vary If you’ve ever checked your credit score online and then applied for a mortgage, you might have noticed a significant difference between the two numbers. That’s because not all credit scores are created equal. There are more than three dozen versions of FICO , and each one serves a different purpose. For example: FICO Auto Score is used by auto lenders to determine your car loan eligibility. FICO Bankcard Score is used by credit card companies. FICO Mortgage Score is used specifically by mortgage lenders. Each version uses a slightly different algorithm to weigh factors like payment history, credit utilization, and length of credit history. Mortgage lenders typically use the most recent version of FICO, which can result in a lower score compared to what you see on consumer credit apps. Getting the new FICO scoring into a company’s system is costly, so when you are getting a free credit report, you are most certainly not getting the most up-to-date and accurate credit score. Companies just can’t afford to give the score away for free.
If you’re planning to buy a home, one of the most important questions on your mind is probably: What credit score do I need to qualify for a mortgage? I’m here to save you hours of research and give you the real facts that matter most. We’ll cover the minimum credit score requirements for various loan types, from conventional to FHA, VA, USDA, and portfolio loans. Plus, read to the end for a bonus tip on how to boost your credit score by 40 to 50 points—fast! Understanding Credit Scores for Mortgages Not all credit scores are created equal. While you may see one score when checking your credit card or car loan, the FICO score used for mortgages could be different. There are over three dozen FICO models, but 90% of lenders rely on one specific version for mortgages. 💡 Pro Tip: The best way to know your mortgage FICO score is to check with a licensed mortgage lender. Minimum Credit Score Requirements by Loan Type
Are you exploring loan options and wondering if an FHA loan might be right for you? If you need leniency on credit, higher debt-to-income ratios, or have faced past credit challenges like bankruptcy or foreclosure, an FHA loan could be the key to achieving your homeownership dreams. Let’s unpack the details of FHA loans, including the latest 2025 updates, their unique benefits, and factors to consider. What Is an FHA Loan? FHA stands for the Federal Housing Administration, a government-backed entity that has been making homeownership more accessible since 1934. During its inception, only 1 in 10 people were homeowners. Today, that number has risen to 6 in 10, thanks in part to initiatives like FHA loans. FHA loans are designed to help borrowers with less-than-perfect credit or other financial challenges qualify for home financing. Every year, FHA adjusts its loan limits based on home value trends, providing a flexible and accessible option for buyers nationwide. FHA Loan Limits for 2025 In 2025, FHA loan limits have increased by approximately 5-6%, reflecting rising home prices across the country. For a one-unit property, the baseline limit is $524,225. However, limits can go much higher in high-cost areas like California, New York, and New Jersey. In these regions, FHA loans can reach up to $1,209,000 for a one-unit property. If you’re curious about the FHA loan limit in your county, use this handy lookup tool . FHA also allows financing for two, three, or four-unit properties with higher limits. This makes it a versatile choice for those interested in multi-family homes.
Are you curious about how conventional conforming loans work and how they might apply to you? Each year, the Federal Housing Finance Agency (FHFA) reevaluates loan limits across the United States based on housing market trends. For 2025, these loan limits have increased again, making it easier for buyers to access affordable financing options with low down payments. This post dives deep into the latest updates, the benefits and drawbacks of conventional loans, and tips for maximizing your mortgage potential. What Are Conventional Conforming Loans? You may hear the term Conventional Loan, or Conforming Loan or Conventional Conforming Loan. They are all the same. A conventional loan is a mortgage not backed by a government agency like FHA or VA loans. The term "conforming" refers to loans that adhere to the lending standards set by Fannie Mae and Freddie Mac , including loan size limits. For 2025, the baseline conforming loan limit is $806,500 , up from $762,000 in 2024. For high-cost areas, the maximum is $1,209,000 , making homeownership more accessible in regions with soaring property values. How Loan Limits Are Determined The formula for determining loan limits is based on the Housing Price Index (HPI) calculated by the FHFA. Here's how it works: The HPI for the third quarter of the current year is compared to the same period the year before. The percentage increase in home values dictates how much loan limits rise. In high-cost areas (think California, New York, and parts of Virginia), limits are adjusted to reflect regional property values. Areas like Hawaii, Alaska, and Key West, Florida , also fall into the high-cost category.
Struggling with your mortgage servicer can be an overwhelming and frustrating experience. When facing financial struggles many homeowners struggle with the ability to effectively communicate with their servicer. It feels like hitting a brick wall. Unfortunately, this issue is more common than you might think. Most U.S. mortgage loans are managed by just a handful of large companies. Problems such as payment misapplication or lack of clarity can arise. If you’re in this situation, don’t lose hope—there are clear steps and reliable resources to help you. The Reality: Arlene’s Story Let me share the story of Arlene, a 70-year-old homeowner who found herself in a financial dilemma. A few years ago, Arlene successfully completed a loan modification and had been diligently making her payments. Recently, however, her mortgage was sold to another servicing company. Suddenly, payments were misapplied, and she began receiving late notices that were reported to credit bureaus. She was trying to get things fixed, but she was struggling with her efforts. Alone and unsure where to turn, Arlene’s situation highlights the challenges many borrowers face when trying to resolve errors with their servicer. Unfortunately, due to the late payments recorded on her credit report, refinancing with another lender was not an option for Arlene. However, there were steps she could take to address the issue directly with her current servicer and escalate the matter if needed. Key Steps to Resolve Issues with Your Mortgage Servicer If you find yourself in a similar situation, follow these tips to address the problem effectively. 1. Document Everything Keeping accurate and detailed records is critical. Start by saving every piece of correspondence, including emails, letters, and even screenshots of app communications. Most servicers will send you written communication—even if you’ve opted for electronic statements. These documents can become vital if you need to escalate the issue or provide proof of your efforts. Keep track of the dates you spoke to representatives. 2. Request Representative Identification Numbers Whenever you speak with a representative, ask for their name and ID number. This step ensures accountability and provides you with a way to track your interactions. If you need to follow up, referencing the representative’s name and ID can expedite the process. 3. Escalate When Necessary If your attempts to resolve the issue with the initial representative are unsuccessful, request to escalate your case. Use specific language, such as: "I would like to please escalate my file." "’I’d like to speak with your supervisor or manager please" Escalating your case often connects you with someone who has more decision-making authority and can provide additional support. 4. Stay Calm and Professional While it’s easy to feel frustrated or even angry, remaining calm and professional can make a significant difference. Representatives are human, and an aggressive or confrontational tone may hinder their willingness to assist. Mortgage companies generally want to avoid foreclosures—they’re more interested in helping you find a resolution. Being respectful and composed will make it easier for them to work with you. If you need to, tell them you have to put them on hold for a few seconds, put them on mute, take a few breaths to focus yourself on the task at hand, and then go back to the phone call. 5. Get a File Number When your issue is escalated, ensure you receive a case or file number. This number is critical for tracking the progress of your complaint and allows you to quickly reference your case if you need to call back. Ask for the name of the department you are talking to, as some corporations are very large and getting to the right department can be challenging. What to Do If Communication Fails If your mortgage servicer remains unresponsive or unhelpful despite your best efforts, don’t give up. You have additional resources available to escalate your complaint to higher authorities. File a Complaint with the Consumer Financial Protection Bureau (CFPB) The CFPB is a government agency tasked with protecting consumers in the financial marketplace, including the mortgage industry. To file a complaint: Visit ConsumerFinance.gov . Click on “Submit a Complaint” in the top-right corner. Create a login to access the complaint submission form. Upload any supporting documentation, such as letters, payment records, and notes from your interactions with your servicer. Clearly describe your desired resolution. For example, you might ask that your payment history be corrected or that a misapplied payment be refunded. Be realistic, fair, and keep to the facts. The CFPB will forward your complaint to the mortgage servicer and require them to respond within a specific timeframe. This process often helps expedite resolutions. Reach Out to HUD for Free Counseling The U.S. Department of Housing and Urban Development (HUD) offers free resources and counseling to homeowners in need. HUD-certified counselors are trained to assist with mortgage issues and can provide guidance tailored to your situation. Visit HUD.gov . Use the search bar to locate services related to complaints or assistance. Many HUD counselors offer live chat or phone support to address your concerns in real-time. Why These Resources Matter Both the CFPB and HUD are designed to protect homeowners like you. They serve as watchdogs for the mortgage industry, ensuring that servicers adhere to legal standards and treat borrowers fairly. The best part? These resources are free to use. Whether you file a formal complaint with the CFPB or seek counseling through HUD, you don’t need to worry about additional expenses during an already stressful time.
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