Savvy Tips Guru

Tips On How To Increase Mortgage Pre Approval Amount

How To Increase Mortgage Pre Approval Amount

Securing a mortgage pre-approval is an essential initial step when purchasing a home. It provides a clear budget and showcases your commitment as a buyer to sellers. However, sometimes the pre-approved amount may be lower than expected, leaving you wondering if there are ways to increase it. In this article, we will explore tips on how to increase your mortgage pre-approval amount and secure a higher loan for your dream home.

What is Mortgage Pre-Approval & Why It’s Important?

Obtaining mortgage pre-approval is a crucial part of buying a home, as it grants you a comprehensive understanding of your financial capacity and empowers you to make well-informed choices. During the pre-approval process, a lender carefully evaluates your financial information, including your income, assets, credit history, and debt-to-income ratio. Using this evaluation, the lender establishes the highest loan sum you are eligible to receive.

Pre-approval serves multiple purposes that are vital to your home-buying journey. First and foremost, it provides you with a practical financial framework, enabling you to concentrate your search on homes that align with your budgetary constraints. This ensures that you don’t waste valuable time and energy on properties that may be unaffordable for you. By setting a clear budget, you can streamline your search and narrow down options that align with your financial goals.

It is crucial to understand that while pre-approval holds importance, it does not guarantee final approval for the loan. The pre-approval is based on preliminary information and is subject to a thorough evaluation once you find a specific property. The lender will assess the property’s value, condition, and other factors before granting final loan approval. However, having a pre-approval in hand puts you in a stronger position during the home-buying process and increases your chances of successfully obtaining the desired mortgage loan.

Why Is Your Pre-Approval Low?

Several factors can contribute to a lower pre-approval amount. These include:

  • Low Credit Score – A low credit score can negatively impact your pre-approval amount. To enhance it, focus on enhancing your credit score through timely bill payments, debt reduction, and rectifying any inaccuracies on your credit report.
  • High Debt-to-Income Ratio (DTI) – A high debt-to-income ratio (DTI) can impact your pre-approval amount. Lenders assess your DTI by comparing your monthly debt payments to your income. To boost your pre-approval amount, aim to lower your DTI by paying off debts or increasing your income.
  • Insufficient Down Payment – A smaller down payment can limit your pre-approval amount. By saving for a larger down payment, you can enhance your purchasing capacity and potentially secure a higher pre-approval amount.
  • Inaccurate or Incomplete Documentation – Make sure to accurately and thoroughly provide all the required documentation. Missing or incorrect information can impact your pre-approval amount.

How to Get Higher Pre-Approval

Now let’s delve into each of these ten valuable tips in detail to help you increase your mortgage pre-approval amount:

1. Improve Your Credit Score

Your pre-approval amount is significantly influenced by your credit score. Prioritize timely bill payments, lower credit card balances, and refrain from new credit applications. Consistently monitor your credit report and promptly rectify any inaccuracies or discrepancies.

2. Reduce Your Debt

High levels of debt can negatively impact your debt-to-income (DTI) ratio, which in turn affects your pre-approval amount. Prioritize paying off existing debts or lowering balances to improve your DTI ratio and increase your pre-approval potential.

3. Increase Your Income

Find ways to boost your income to enhance your pre-approval amount. Explore opportunities to increase your income, such as taking on additional employment, engaging in freelance work, or discussing a salary raise with your current employer. A higher income demonstrates greater repayment capacity, thus increasing your pre-approval amount.

4. Save for a Larger Down Payment

By saving a substantial down payment, not only will you decrease the loan amount, but you will also demonstrate financial stability and responsibility to lenders. Aim to save at least 20% of the home’s purchase price, as this can significantly impact your pre-approval amount.

5. Explore Loan Programs

Research different loan programs to find those that offer more flexibility or higher pre-approval amounts. Government-backed loans, such as FHA or VA loans, or special programs for first-time homebuyers, may provide higher pre-approval amounts or more lenient qualifying criteria.

6. Pay Off Collections and Judgments

Outstanding collections or judgments on your credit report can hinder your pre-approval amount. Prioritize settling any outstanding collections or judgments before applying for pre-approval to improve your creditworthiness and increase your pre-approval potential.

7. Seek Professional Advice

Consulting with a reputable mortgage broker or financial advisor can be invaluable in improving your financial situation and increasing your pre-approval amount. Professional advisors can offer tailored advice and assist you in navigating the intricate realm of mortgages.

8. Lower Your Monthly Expenses

Take a closer look at your monthly expenses and search for ways to trim expenditures. By reducing your monthly expenses, you can improve your DTI ratio, which may lead to a higher pre-approval amount. Consider trimming unnecessary expenses, renegotiating bills, or finding cost-effective alternatives.

9. Increase Your Savings

Building your savings demonstrates financial stability and can positively influence your pre-approval amount. Lenders often look for reserves or a cushion of savings. Aim to have several months’ worth of mortgage payments in reserves to showcase your financial preparedness and increase your pre-approval amount.

10. Shop Around for Lenders

Different lenders have varying criteria, and their pre-approval amounts can differ. It is essential to evaluate and compare various lenders and their terms to identify the most suitable choice for your individual circumstances. By exploring various lenders, you can maximize your pre-approval amount and potentially secure better loan terms.

By implementing these ten tips, you can improve your financial profile, boost your creditworthiness, and increase your mortgage pre-approval amount. Remember that each step contributes to an overall improvement in your financial situation, making you a more attractive candidate for lenders and increasing your chances of securing the mortgage loan you desire. 

Mortgage Pre-Approval Amount Can Be Raised

While receiving a lower pre-approval amount can be disheartening, there are several proactive steps you can take to increase it. By improving your credit score, reducing debt, saving for a larger down payment, and seeking professional advice, you can enhance your financial profile and potentially secure a higher pre-approval amount. Remember, it’s essential to be patient, diligent, and informed throughout the process to achieve your homeownership goals.


  • RJ Sinclair

    RJ is our resident money guru, with a knack for keeping finances neat and organized. With previous experience as a budget manager in supply chain companies, he brings a wealth of knowledge and expertise to the table. Count on RJ as a trustworthy source for valuable money tips and advice to help you make the most of your financial journey.