For many prospective homeowners, the most daunting piece of the buying process comes long before the negotiations and even the open houses: getting a home finance loan.

We get it — there’s a ton of moving parts to juggle whether you’re a first-time buyer or an experienced investor. By the time you’ve mastered the nuances of the market you’re looking in, which types of loans are available to you and what your budget will look like, the house you were so ready to move out of may look a lot more attractive.

Read on to learn how Bungalo® can help you navigate your mortgage like a real estate pro.

Researching your home finance loan options

Determining which loan makes the most sense for your financial situation will be your first step toward your future dream home. With so many loan types out there, let’s go over some of the most common and how to know whether they’re right for you:

Conventional loan

When you think of a mortgage, a conventional loan is likely what comes to mind.

In this situation, a private financial lender (such as a bank) funds your purchase. This is the most popular form of lending as conventional loans don’t have as strict of regulations on income, home type and location like other options out there. However, they can be difficult to obtain depending on your credit score and debt-to-income ratio. Given the market’s current low interest rates, a fixed rate mortgage will often make the most sense for home buyers.

If you don’t qualify for a government-backed loan or are looking to take advantage of a lower interest rate and monthly payment by putting forward a large percentage down, a conventional loan will likely be best for you.

FHA loan

If your credit score isn’t the greatest (let’s admit it: whose is?) and you’re looking to put down a lower down payment, check if you qualify for a home loan from the Federal Housing Administration.

The flexible credit and low down payment requirements make FHA loans especially attractive for single-income families and those working to get their credit scores up. You’ll just want to be mindful of whether you meet the specific requirements set forth by the FHA — generally, your house payment can’t exceed 31% of your income.

VA loan

Government-backed loans come in several forms, one of them being a VA loan insured by the Department of Veteran Affairs. With a VA loan, eligible service members, veterans and their spouses are able to qualify for a low-cost mortgage rate regardless of their credit score.

Just remember not everyone who served in the Armed Forces or National Guard automatically qualifies for a VA loan. You’ll want to check whether the duration of you or your spouse’s service aligns with the VA’s eligibility requirements.


Homeowners with an interest-only mortgage only pay the interest on their loan for a set period of time. After that set loan term expires, the borrower is expected to pay both the principal and the interest.

If you’re moving to a new area and are looking to settle and save before paying down your loan, an interest-only payment plan may make the most sense for you. However, your monthly payment will grow significantly after those first few years pass, so you’ll need to be especially mindful of your finances.

Now, with all of those mortgage types in mind, let’s go over how you can navigate the pre-approval process.

Applying for home finance loan preapproval

Getting pre-approved before you begin looking for your new home will help guide your search. You’ll want to get all of your ducks in a row, however, before meeting with your mortgage lender.

As you chase down all the documents floating around in your filing system, follow this checklist to stay organized:

  • Income and employment: W-2 wage earners will simply need a copy of their W-2 and two recent pay stubs. Those who are self-employed, freelancing or independent contractors will need a year-to-date P&L statement and two years of records including their Form 1099s.
  • Debts: Your debt-to-income ratio is an important piece of the lender approval process. Be sure to list all debt payments including student loans, credits cards and any outstanding auto loans.

  • Assets: Typically, you’ll want to copy two month’s worth of statements for every account whose assets you’re using to qualify — even the blank pages. Apologies to overworked printers everywhere.

Depending on your unique financial situation, there may be additional records your lender will ask you to show, such as rent payments or divorce documents. By getting organized and being pre-approved in advance, you can shop around and make sure you’re getting the best rate possible.

Turning your loan into a home

While you may think the foundation of your new home is made of concrete, it actually all roots back to the pre-approval process — well, maybe not literally, but you get what we’re saying.

Pre-approval has the potential to majorly impact your search as well your ability to eventually close on your dream home. While acquiring a loan may feel overwhelming, getting it out of the way earlier has some major benefits:

  • Setting your budget: You found your dream home. It has every feature you could have wanted and more. Then when you get approved for the loan type of your choice, you find out the price is … seriously out of your budget. Pre-approval helps you to know exactly what you’re able to afford in advance. You’ll avoid considerable wasted time and broken hearts.

  • Credibility: There are few bigger disappointments in the home buying process than to find out you’ve been out-bid or were going up against an all-cash buyer. Getting pre-approved gives you some major credibility that could make all the difference with your seller.

  • Closing process: Closing on a home can typically take anywhere from one to two months, which may extend even further out if you’re waiting on your mortgage approval. Having your lender agreement in advance will allow help to move forward through appraisal and inspection a little faster.

By having your loan pre-approved, you’ll be able to minimize the chance of not closing on your home and avoid losing money paid upfront for expenses.

Making an offer with your pre-approval letter

With an approval letter in your hand (or uploaded digitally to your computer), all that’s left for you to do is to find the home of your dreams.

At Bungalo, we’re here to make every step of the buying process as smooth and straightforward as it should be. From convenient self-tours, certified homes, and transparent pricing to closing on your new property.

Once you’ve been approved by the mortgage loan officer of your choice, all you have to do to create an offer is upload your approval letter and enter some information. Plus, after you submit your first-come, first-served offer, you can rest assured knowing you can’t be outbid.

Learn more about buying directly through Bungalo and be one step closer to move-in day.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.

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