How To Increase Your Mortgage Preapproval Amount

Buying a house is a major financial commitment. Striking the right balance between the dreams you have for your future home with the reality of your monthly mortgage payment can take some time. But without the right mortgage preapproval amount, it can be even more challenging to find the perfect fit.

If it makes sense for your finances, increasing your mortgage preapproval amount might be possible. Let’s dive into how to increase your mortgage preapproval amount for a smoother home search.

A mortgage preapproval is a process that determines how much money you can borrow for your home purchase. Before a lender grants a preapproval, they will look at your complete financial picture, including information about your income, assets and credit score. To do this, you’ll need to submit specific documents that are required by your lender as proof that you can afford the loan’s monthly payments.

What the lender finds on their deep dive into your personal finances will impact the preapproval amount they grant you. Beyond how much you can borrow, your preapproval typically includes information about what your interest rate might be.

If you want to take it a step further, Rocket Mortgage^® offers Verified Approval – a more in-depth look at your finances by an underwriter that can help you get a better idea of what you qualify for. Having this higher level of vetting by your lender will also help you make a stronger offer when you find the right house.

The amount you are preapproved for is not necessarily the final maximum you can afford on your home purchase. If you think that your finances can handle more mortgage, you can take action to increase your mortgage preapproval amount. Here’s how:

• Find a co-signer or co-borrower
• Improve your credit score
• Boost your income
• Pay off other debts
• Make a larger down payment
• Talk to another lender

A larger preapproval amount can allow you to consider a wider range of homes.

If you aren’t satisfied with your initial preapproval amount, you can take steps to possibly unlock a higher mortgage loan amount.

Before you jump into increasing your mortgage loan amount, consider whether you can truly afford the bigger payments. Take the time to realistically assess your budget before attempting to increase your preapproval amount in order to buy a house.

If you decide that a larger preapproval amount is the right move for your finances, you have several ways to give that amount a boost. Consider these actionable steps to get approved for a higher mortgage loan:

1. Improve Your Credit Score

A good first step is to look at your credit report. If you already have a great credit score, you can’t do much to raise it significantly. But if you have a credit score that could stand some improvement, then take action.

When you improve your credit score, a lender may be willing to increase your preapproval amount. Additionally, a higher credit score may be able to lower your interest rate.

2. Generate More Income

A bigger income can lead to a larger preapproval amount. That’s because you’ll be able to handle a larger mortgage payment with more money coming in every month.

Of course, generating more income can be easier said than done, so it pays to think through all of your income sources. Chances are that you only included your W-2 income on your application. But you can go back to include other sources of income.

A few easily overlooked sources of income include alimony, child support, disability income, Department of Veterans Affairs (VA) benefits, retirement benefits, side hustles, and bonuses. If your household receives any of these types of income, you may be able to include it on your application.

3. Pay Off Debts

When determining how much you can borrow, a lender will compare your monthly debt payments to your gross monthly income to determine your debt-to-income ratio (DTI). If you have an extensive monthly debt burden – for example, a high DTI ratio – your preapproval amount will be lower. But if you can eliminate some of these debts – such as credit cards or personal loans – from your books, then a lender may be willing to increase your preapproval amount.

4. Find A Different Lender

Not all lenders view things in the same way. If a mortgage lender provides a low preapproval amount, then you may decide to fill out another mortgage application with a different lender. In some cases, you may find that switching lenders makes all the difference.

5. Make A Down Payment Of 20%

If you can make a down payment of at least 20% of the total purchase price, you may be approved for a higher loan amount.

That’s because putting down 20% eliminates private mortgage insurance (PMI), which is a cost tacked onto your monthly payments when you take out a conventional loan. The lender may increase your preapproval amount without mortgage insurance added to your monthly mortgage. Keep in mind, that government-backed loans like FHA loans may include mortgage insurance premiums which are cannot be removed with a larger down payment.  

6. Apply For A Longer Loan Term

A home loan with a longer term allows you to stretch out your mortgage balance over more payments. In most cases, a longer term – such as a 30-year fixed-rate mortgage – will calculate into more affordable monthly payments. As a result, a lender may be willing to lend you more if the loan is set for a 30-year versus a 15-year term.

7. Find A Co-Signer

Closing a mortgage with a co-signer is typically not ideal for the co-signer. Although you’d be living in the house, their assets would be on the line if you couldn’t keep up with your mortgage payments. As such, it can be challenging to find a willing co-signer.

While it may be difficult to lock down a co-signer, if you can recruit a willing family member or friend with a high enough income, then you may be able to give your preapproval amount a boost.

8. Find A More Affordable Property

Ultimately, you may not be able to increase your mortgage amount. But that doesn’t mean homeownership isn’t in the cards. Instead, you’ll have to start searching for a more affordable property.

If you aren’t sure how much you can afford, consider using a mortgage calculator to see how the numbers work out. You can play around with the options to find the most affordable option for your situation.

If you want to make things even more specific to your situation, check out our home affordability calculator. It will allow you to run the numbers on what home price you can afford right now.

During the preapproval process, a mortgage lender will look at your income, assets, and credit history when underwriting your application. The details of your financial situation will dramatically impact the amount you are preapproved for.

But no matter what you’re initially preapproved for, you should decide for yourself what size mortgage payment will fit into your budget. Most experts recommend that you don’t spend more than 30% of your gross monthly income on your housing costs, including homeowners insurance, homeowners association (HOA) dues and utilities.

Let’s answer some of the most frequently asked questions surrounding increasing your mortgage preapproval amount.

How do I increase my mortgage amount?

There are many different ways you can try to increase your mortgage preapproval amount. Some common ways to do this include improving your credit score, paying off debt, obtaining a longer loan term and boosting your income.

Can I extend my mortgage preapproval?

Your mortgage preapproval can’t be extended if you go past the 60 – 90 days it’s valid for. You’ll have to submit all of your preapproval documentation again so your lender has all of your most up to date financial information in order to proceed with another preapproval.

Can switching lenders help increase my mortgage preapproval amount?

Since every lender follows different requirements, it might be worth your while to switch lenders in order to potentially get a higher mortgage preapproval amount. Shopping around for a different lender could help you find a better rate and/or preapproval amount.

Although it’s incredibly tempting to seek out a more expensive home with all of the items on your wish list, it’s important to consider your current budget to make sure you can afford a larger home loan.

If you want to unlock a larger mortgage preapproval amount – and make a more competitive offer on a home you’re interested in – it may be possible.

Start the process with Rocket Mortgage and get approved today.