How To

How to Shop for a Mortgage Without Hurting Your Credit

When you find a mortgage and apply for a home loan – whether you are a first-time homeowner, needing to move, or buying investment properties – your credit doesn’t need to be affected.

While one approved mortgage won’t do much to your credit rating, applying for multiple mortgages can affect your credit.

For example, if an applicant applies for multiple loans in a short amount of time, they are more likely to be declined. These applications can all be mortgages, while credit card and school or car loans are also recorded.

Even if your credit is not negatively affected, every application a lender makes on your behalf is documented. This means when your credit score is requested from the Credit Bureau, all applications – whether accepted or denied – are listed.

But there is a way to apply for a mortgage without hurting your credit score:

How to Shop for a Mortgage


1. Shop for Mortgage Lenders
2. Budgeting
3. Submit Your Application
4. Home Ownership
Step 1

Shop for Mortgage Lenders

While shopping to know your options is a good idea, applying can hurt your credit score. A credit report is most likely to get dinged when someone applies for multiple loans in a short amount of time.

Especially if they do not get approved. Other loan applications such as credit cards, or even school and car loans should not be applied for close to your mortgage application. Finding a lender may sound like a daunting task, and the easiest route is to stick with the bank you are most familiar with.

You can shop around for mortgages online easily and even compare mortgage lenders without actually applying. Collect all the information you can before submitting an application, in order to protect your credit rating.

Step 2


When you want to find a mortgage and compare mortgages from different lenders, start by budgeting out how much you can afford for a down payment. The down payment is due before the home is yours and is calculated by taking a small percentage of the total purchase amount of the home.

Below is a basic example of calculating how much money you would need to pay before the house is even yours:

If you apply for a mortgage on a $500,000 home, a low down payment amount would be 5% or $25,000.

This would leave you owing $475,000 on your mortgage. Now add interest to that and plan on making monthly payments for a decade or two.

Think of a mortgage as a new relationship. Some people fall in love with a house and then try to come up with a budget down the road. Like many other Americans, you may be stuck in a situation where you can’t afford the mortgage and consequently other things in life.

You may have shopped for a mortgage without affecting your credit, only to wind up being tight on your high mortgage payment, resulting in applying for more loans. The American dream includes being a landowner, and with the right budget and good credit, it is achievable.

Step 3

Submit Your Application

Once you have shopped around for an appropriate mortgage lender and have your down payment costs and affordable interest rates figured out, submit your application. The lender will do most of the work from this point on, leaving you to present copies of important legal documents.

  • Copies of valid ID such as a driver’s license and passport are initially required.
  • Federal taxes from the previous year or two are also required.
  • Any income and assets should be declared to increase the likelihood of your mortgage application success.

Any debts such as other mortgages, credit cards, school and car loans etc. must also be declared. These documents are required of every person wishing to be put on title. Respond quickly to any questions the lender may have, as this will help speed up the submission process.

If your mortgage application is not approved, hold off on applying for others, and consider lowering your requested amount. Too many applications can potentially affect your credit, especially if they are not approved.

Re-evaluate your budget and apply again down the road so your credit doesn’t show multiple applications close together.

If you are approved, it is called a Conditional Approval only, so you don’t have the keys to the house – yet. You will need to sign the Purchase Agreement, and then the lender will order the home appraisal and Title search.

If you are going to buy Homeowners’ Insurance, consider avoiding national banking institutions as they usually offer higher interest rates. Now is the time to get your down payment amount ready in a cashier check or a wire transfer, as well as any additional closing costs.

Your credit will not be affected after your application is approved.

Step 4

Home Ownership

On closing day, you receive the keys to your new home, which is an exciting time for new homeowners. This also tends to be an expensive time on top of just having paid your down payment and now taking on a monthly mortgage payment.

There are always moving costs, as well as things that undoubtedly need furnishing or replacing. Continue to budget accordingly, as to not hurt your credit by applying for more loans. Remember, having a mortgage is like a long-term relationship, ready to be reflected in your credit score.

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    Victoria specializes in content writing and editing. She has traveled to almost 40 countries and loves walking her dog in the Rocky Mountains, where she calls home.

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    Last Updated: October 19, 2021

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