Start by knowing what you can afford before you contact any lender

Shopping for a mortgage means comparing loan terms, interest rates, and fees across different lenders — but you need a realistic budget first. Before you call a lender or visit a website, calculate how much house you can actually afford based on your income, debts, and down payment savings. A rough starting point: most lenders will lend you 2.5 to 3 times your gross annual income, though this varies by your debt-to-income ratio (the percentage of your monthly income that goes to debt payments).

Pull your credit report from annualcreditreport.com, the only free source authorized by federal law. Check it for errors — a mistake can lower your score and raise the interest rate you are offered. If your score is below 620, most conventional lenders will not work with you; if it is between 620 and 680, you will pay higher rates. Scores above 740 typically get the best offers.

Write down your debts: car loans, student loans, credit cards, and any other monthly obligations. Add them up. If your total monthly debt payments are more than 43 percent of your gross monthly income, lenders will hesitate or decline. This is the debt-to-income ratio that matters most to them.

Key Takeaways

  • Check your credit report at annualcreditreport.com and fix errors before shopping, because your credit score directly determines the interest rate you are offered.
  • Get pre-may have access to (not pre-approved) from at least three different lenders to compare their rate quotes, because rates vary significantly and change daily.
  • Compare the full loan estimate, not just the interest rate — closing costs, origination fees, and discount points add thousands to the true cost.
  • Lock your interest rate in writing once you find a lender you want to use, because rates can shift between the quote and closing.
  • Shop within a two-week window to avoid multiple hard credit inquiries damaging your score, since inquiries within 14 days usually count as one.

Get pre-may have access to quotes from at least three lenders

Pre-qualification is free and non-binding. You tell a lender your income, debts, and down payment amount, and they give you an estimate of what rate and loan amount you might receive. This is not a promise — it is a starting point. Call or visit the website of at least three lenders: a bank you already use, a mortgage broker (who shops multiple lenders for you), and an online lender like Better.com, LoanDepot, or Rocket Mortgage. Each will give you a rate quote.

When you ask for a quote, specify the loan type: a 30-year fixed-rate mortgage is the most common and easiest to compare. Ask for the interest rate, the annual percentage rate (APR), and the estimated monthly payment. The APR includes the interest rate plus fees, so it is a better number for comparison than the rate alone.

Do this within a short window — ideally two weeks. Multiple lenders will pull your credit report, and each pull is a "hard inquiry." Hard inquiries lower your score slightly, but inquiries from mortgage lenders within 14 days usually count as a single inquiry for scoring purposes. Shopping outside that window means each inquiry hits your score separately.

Request a Loan Estimate from each lender you are seriously considering

Once you have narrowed your list to two or three lenders, ask each one for a Loan Estimate. This is a standardized three-page form that federal law requires lenders to provide within three business days of your request. It shows the loan amount, interest rate, monthly payment, and all closing costs broken down by category.

The closing costs section is where lenders differ most. You will see origination fees (what the lender charges to process the loan), appraisal fees (paid to a third party to value the house), title insurance, property taxes, homeowners insurance, and sometimes discount points (a fee you pay upfront to lower your interest rate). Some lenders bundle these differently or charge more for the same service.

Line up the Loan Estimates side by side. Compare the interest rate, the APR, and the total closing costs. A lender with a 0.25 percent lower rate might charge $2,000 more in fees — you need to see the full picture. Use the APR as your main comparison number, since it reflects both rate and fees.

Understand discount points and whether they make sense for you

Some lenders will offer you the choice to pay discount points — an upfront fee that lowers your interest rate. One point costs 1 percent of the loan amount. On a $300,000 loan, one point costs $3,000 and might lower your rate by 0.25 percent.

Points make sense only if you plan to stay in the house long enough to recoup the cost through lower monthly payments. If you pay $3,000 upfront to save $75 per month, you break even after 40 months (about 3.3 years). If you think you might sell or refinance within five years, skip the points. If you plan to stay 10 years or longer, points usually pay for themselves.

Ask each lender what rates they offer with zero points, one point, and two points. This shows you the trade-off clearly and lets you decide whether paying upfront makes sense for your situation.

Lock your rate in writing once you choose a lender

Interest rates move daily. Once you decide which lender to use, ask them to lock your rate in writing. A rate lock guarantees that your interest rate will not change for a set period — usually 30, 45, or 60 days. This protects you if rates rise between now and closing.

The lock should be in writing and should state the exact rate, the loan amount, the loan type (30-year fixed, for example), and the number of days the lock is good for. If your closing will happen after the lock expires, ask the lender to extend it — some do this free, others charge a fee.

A longer lock (60 days instead of 30) costs more because the lender is taking on more risk. Ask what the cost is before you agree. If you are confident closing will happen in 30 days, a 30-day lock is cheaper.

Compare what each lender requires to close the loan

Beyond rate and fees, lenders differ in what documents they require and how quickly they move. Some want a full financial picture (tax returns, bank statements, pay stubs); others ask for less. Some close in 15 days; others take 45. If you are in a competitive offer situation and need to close fast, speed matters.

Ask each lender: How many days to closing? What documents do you need from me? Will you order the appraisal right away, or wait? Do you have a loan officer I can call with questions, or is everything online? These details affect your experience and your ability to close on time.

Frequently Asked Questions

Is pre-approval the same as pre-qualification?

No. Pre-qualification is an estimate based on information you provide; the lender does not verify it. Pre-approval involves a credit check and document review, so it is more reliable. For shopping purposes, pre-qualification quotes are enough to compare rates across lenders.

Can I negotiate the interest rate or closing costs?

Interest rates are set by the market and your credit profile, so you cannot negotiate them. Closing costs vary by lender and some fees are negotiable — origination fees and discount points especially. Ask each lender if they will match a competitor's offer or waive certain fees.

What if my rate quote expires before I am ready to lock?

Rate quotes are usually good for 10 to 21 days. If you need more time, ask the lender to extend the quote. They may do it free or charge a small fee. Once you are ready to move forward, you can lock the rate in writing.

Should I shop with banks, mortgage brokers, or online lenders?

Each has trade-offs. Banks offer stability and may give you a discount if you already bank there. Brokers shop multiple lenders and may find better rates, but they take a commission. Online lenders are often faster and cheaper but offer less personal support. Shop all three to compare.

What happens if rates drop after I lock?

You are locked in at your rate and cannot go lower without paying a fee to break the lock and re-lock at the new rate. Some lenders offer a "float-down" option that lets you lock in a lower rate once during the lock period, usually for a fee. Ask about this before you lock.