How to Qualify: Credit, DTI, Appraisal & Timeline
Most lenders want 620+ credit (best rates at 740+), DTI under 43–50% including the new payment, 15–20% equity remaining after the loan, and a clean appraisal. Self-employed borrowers should prep two years of returns — second-lien underwriting is stricter than purchase underwriting.
DTI example
Gross $8,000/mo, debts $2,400 (mortgage $1,800 + auto $400 + cards $200). Add a $620 equity payment → $3,020 / $8,000 = 37.8% DTI — inside most caps. At $4,000 debts you’d hit 57% and need a smaller loan or paid-off debt first.
Timeline
- Days 1–3: application, credit pull, income docs.
- Days 4–14: appraisal/valuation + underwriting.
- Days 15–21: approval, disclosures, 3-day right of rescission (primary homes).
- HELOCs fund right after rescission; loans fund as a lump sum.
Questions, answered
Will applying hurt my credit?
One hard inquiry dings a few points temporarily. Rate-shop within a 14–45 day window — bureaus count same-purpose pulls as one.
Can I get denied with good credit?
Yes — high DTI, low appraisal, or insufficient income sink more applications than scores do. Fix DTI first; it moves fastest.