How to Get Pre-Approved for a Mortgage With a 620 Credit Score (Step-by-Step Guide)

Getting pre-approved for a mortgage can feel intimidating, especially if your credit score is around 620. While this score is considered “fair,” it does not prevent you from qualifying for a mortgage. The key is understanding lender requirements, improving your financial profile, and following a clear strategy.

This guide from Finance Mate Club will walk you step by step through the pre-approval process, so you can confidently pursue homeownership.

What Is Mortgage Pre-Approval?

Mortgage pre-approval is an essential first step in the home-buying process. It is a formal evaluation by a lender to determine how much money they are willing to lend you based on your financial profile. This process is more in-depth than pre-qualification because it involves verifying your income, debts, credit score, and other key financial factors.

Why Pre-Approval Matters

1. Shows Sellers You Are Serious
   A pre-approval letter signals to sellers that you are a committed buyer with financing already in place. This can make your offer more competitive, especially in a busy housing market.
2. Clarifies Your Budget
   Knowing the maximum loan amount you qualify for helps you focus on homes within your price range and avoid wasting time on properties you cannot afford.
3. Identifies Potential Issues Early
   Lenders may spot issues with your credit history, debt-to-income ratio, or documentation early in the process, giving you time to correct them before making an offer.
4. Speeds Up the Closing Process
   Pre-approval accelerates the mortgage application once you find a home, as most of the verification work is already completed.

Step 1: Check Your Credit Report and Score

Your credit report and score are critical factors that lenders use to evaluate your mortgage application. For someone with a 620 credit score, understanding your credit situation is especially important.

How to Check Your Credit

1. Obtain Your Credit Reports
   Request your credit reports from the three major credit bureaus:

• Equifax
• Experian
• TransUnion
  You are entitled to one free report from each bureau annually through AnnualCreditReport.com.

1. Review for Accuracy
   Check each report for errors such as:

• Incorrect account balances
• Accounts that do not belong to you
• Missed or late payments that were actually paid on time
  Dispute any inaccuracies immediately with the respective bureau.

1. Understand Your Credit Score
   A 620 credit score is considered “fair.” While it may result in slightly higher interest rates, it still allows eligibility for many mortgage programs, including FHA loans and some conventional loans with larger down payments.

Tips to Improve Your Score Before Applying

• Pay Down Small Debts: Reducing outstanding balances on credit cards can slightly improve your score.
• Correct Errors: Dispute inaccuracies on your credit report to avoid unnecessary negative impact.
• Avoid New Credit Applications: Opening new credit accounts before pre-approval can temporarily lower your score.
• Maintain Consistent Payments: Ensure all bills are paid on time to demonstrate financial responsibility.

By checking your credit report and understanding your score, you are better prepared to apply for pre-approval and increase your chances of securing favorable mortgage terms.

Step 2: Gather Financial Documents

One of the most important steps in the mortgage pre-approval process is gathering the necessary financial documents. Lenders need these documents to verify your income, assess your debt, and ensure that you can afford the loan. Being organized and having all documents ready can speed up the pre-approval process and demonstrate that you are a responsible borrower.

Key Documents to Prepare

1. Recent Pay Stubs

• Provide the last 2–3 months of pay stubs to show consistent income.
• Self-employed individuals should provide profit and loss statements or 1099 forms.

1. W-2 Forms or Tax Returns

• Lenders usually require W-2 forms or tax returns from the last 2 years.
• This helps verify your employment history and total income.

1. Bank Statements

• Provide statements from the last 2–3 months for checking and savings accounts.
• This shows your cash flow, savings habits, and ability to cover down payments and closing costs.

1. Documentation of Debts

• Include all outstanding debts such as student loans, credit cards, and car loans.
• Lenders use this information to calculate your debt-to-income (DTI) ratio, which is a critical factor in mortgage approval.

1. Proof of Assets

• Include savings accounts, retirement accounts (401(k), IRA), and investment accounts.
• Demonstrating sufficient assets can increase your chances of approval, especially with a fair credit score around 620.

Why This Step Matters

Having all your financial documents prepared:

• Speeds up the pre-approval process
  Lenders can review your information quickly without back-and-forth requests.
• Shows financial responsibility
  Organized documentation signals that you are serious about purchasing a home.
• Helps identify potential issues early
  You may discover gaps, errors, or missing information that could delay approval, giving you time to correct them.

By gathering these documents before contacting lenders, you set yourself up for a smoother, faster, and more successful mortgage pre-approval experience.

Step 3: Improve Key Factors Before Applying

Even with a 620 credit score, taking proactive steps can significantly improve your chances of mortgage pre-approval. Lenders consider multiple aspects of your financial profile, not just your credit score. By addressing these key factors, you strengthen your application and may secure better loan terms.

1. Reduce Debt-to-Income Ratio (DTI)

• What it is: DTI is the percentage of your monthly income that goes toward debt payments.
• Why it matters: Lenders use DTI to determine how much additional debt you can handle. A lower DTI indicates financial stability.
• How to improve it:
• Pay down credit card balances or personal loans.
• Avoid taking on new debt before applying.
• Consider temporarily increasing income or reducing discretionary spending to improve your ratio.
• Target: Lenders typically prefer a DTI below 43%, but lower is even better for pre-approval.

2. Save for a Larger Down Payment

• A larger down payment reduces the lender’s risk and can offset the impact of a fair credit score.
• Aim for at least 10–20% of the home price if possible.
• Benefits of a larger down payment:
• Lower monthly mortgage payments
• Higher chance of approval
• Potentially lower interest rates

3. Avoid New Debt

• Opening new credit cards or loans shortly before applying can temporarily lower your credit score and increase your DTI.
• Lenders may view new debt as a risk factor.
• Maintain stable financial activity and only use existing credit responsibly during the application period.

4. Provide Evidence of Stable Income

• Consistent employment history reassures lenders that you can reliably make mortgage payments.
• Include documentation of income, such as pay stubs, W-2s, or tax returns, covering at least the past 2 years.
• Even if your credit score is fair, steady income improves your overall approval chances.

Summary

By focusing on reducing your DTI, saving for a larger down payment, avoiding new debt, and demonstrating stable income, you maximize your likelihood of mortgage pre-approval. These steps show lenders that you are financially responsible and prepared for homeownership.

Step 4: Shop Around for Lenders

Not all mortgage lenders have the same requirements or programs, especially for borrowers with a 620 credit score. Shopping around allows you to find the best terms and identify lenders who are willing to work with your credit profile.

Types of Lenders to Consider

1. FHA Loans

• Backed by the Federal Housing Administration, FHA loans often accept credit scores as low as 580.
• They typically require a down payment of at least 3.5%.
• Ideal for first-time homebuyers or those with fair credit.

1. Conventional Lenders

• Many conventional lenders consider scores above 620, especially when a larger down payment is available.
• Interest rates and fees vary, so comparing multiple lenders can help you find favorable terms.

1. Local Banks or Credit Unions

• Smaller, community-based institutions may offer more personalized service.
• They may be more flexible with applicants who have fair credit scores.

How to Compare Lenders

• Interest Rates: Even a small difference can save thousands over the life of the loan.
• Fees: Look for origination fees, application fees, and closing costs.
• Loan Terms: Consider the length of the loan, fixed vs. adjustable rates, and any special programs for first-time buyers.

By comparing lenders, you can increase your chances of approval and find the best mortgage deal for your situation.

Step 5: Apply for Pre-Approval

Once you have selected the lender(s) that fit your needs, the next step is to formally apply for pre-approval.

The Pre-Approval Process

1. Submit Your Application

• Include all required financial documents, such as pay stubs, tax returns, bank statements, and debt information.
• Complete the lender’s mortgage application form accurately and thoroughly.

1. Lender Evaluation

• The lender will pull your credit report and review your financial profile, including income, assets, and debts.
• They calculate your debt-to-income ratio, verify employment, and determine your eligibility.

1. Receive Pre-Approval Letter

• If approved, you will receive a pre-approval letter specifying the maximum loan amount and estimated terms.
• This letter strengthens your position as a serious buyer when making offers on homes.

Important Tips

• Pre-approval letters are typically valid for 60–90 days.
• Avoid making major financial changes, such as opening new credit accounts or making large purchases, during this period.
• Keep copies of your pre-approval documents for reference and to share with real estate agents or sellers.

By carefully selecting lenders and completing the pre-approval process, you are taking critical steps toward securing a mortgage even with a fair credit score.

Step 6: Maintain Good Financial Habits During the Process

Even after submitting your pre-approval application, maintaining strong financial habits is crucial. Lenders often recheck your credit and financial status before finalizing your mortgage, so any negative changes can affect approval.

Key Habits to Maintain

1. Pay Bills on Time

• Consistently paying bills demonstrates financial responsibility and prevents your credit score from dropping.
• Late payments, even after pre-approval, can impact lender decisions.

1. Avoid Large Purchases or New Debt

• Do not make significant purchases like a new car or open additional credit accounts during this period.
• New debt can increase your debt-to-income ratio and lower your credit score, which may affect mortgage approval.

1. Keep Credit Card Balances Low

• Maintain a low utilization ratio (ideally below 30%).
• High balances can signal risk to lenders, even if your payments are on time.

1. Monitor Your Accounts Regularly

• Check your bank and credit accounts frequently to ensure there are no unexpected changes or errors.

By following these practices, you protect your financial profile and ensure that the pre-approval remains valid when you are ready to close on a home.

Final Thoughts

Getting pre-approved for a mortgage with a 620 credit score is absolutely possible, but preparation is key. The steps to increase your chances of approval include:

• Checking your credit report to ensure accuracy and address any issues.
• Gathering all necessary financial documents for the lender.
• Improving key factors like debt-to-income ratio, down payment, and employment stability.
• Shopping around for lenders to find the best mortgage programs for fair credit.
• Maintaining responsible financial habits during the process.

By taking these actions, you increase the likelihood of pre-approval and may even qualify for better loan terms. Consistent preparation, organization, and financial responsibility are the keys to homeownership, even with a fair credit score.