First-Time Homebuyer FAQ: Can I Apply for Credit When Getting a Mortgage?

Posted by Laine Smith on 2/6/17 10:00 AM

Topics: Home Buying

Your loan has been fully approved and closing day has been marked on your calendar. While anticipating the day your home finally becomes your own, you’ve started to browse for furniture and appliances to deck out your new digs and intend on applying for a store credit card to score a discount. But wait; can you apply for credit when getting a mortgage?


Simply put: no. Some homebuyers are led to believe that because their home financing is in line, the deal is done and they are free to make large financial decisions, even prior to closing. But that’s not the case. Applying for new credit (and then charging high prices items on that new credit) is one of the big no’s to avoid after applying for a mortgage, as well as before closing.

It’s best to avoid this action, because:

New credit inquiries can lower your credit score. When you are invited to open a new line of credit, the company will pull your credit report, resulting in an adverse effect on your credit score. Your credit score will be checked before closing and a dip in your credit could derail your home financing.

Mortgage approval is based on a debt-to-income ratio. If you make a large purchase on credit before closing on your loan, it could also derail your mortgage. A lender looks at your income in comparison to your monthly debts such as installment loans, credit cards, student loans, etc. Bottom line: consult with your lender before making any financial decisions, big or small, while your loan is still in process.

Looking for more information about the homebuying and financing process? Download our free Mortgage 101 Handbook, the ultimate guide for first-time homebuyers.

Download: Mortgage 101 Handbook

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