Buying a home is an exciting time, but it also involves a lot of big financial decisions. One key number you’ll need to determine is the loan amount you want to apply for. This will impact your monthly payments, interest rate, and more. But what if after you’ve applied for a mortgage loan, you realize you want to change the amount? Is adjusting your loan amount possible at this stage of the homebuying process? Let’s take a closer look.
When Can You Change Your Loan Amount?
In most cases, you can change your loan amount any time before closing However, once your loan is approved, the process gets more complicated Here are some key times when you may be able to adjust your mortgage amount
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Before submitting your application: At this early stage, feel free to tweak your loan amount as needed until you settle on the right number for your situation. Just be sure to get pre-approved again if you make a big adjustment.
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Once you’ve been pre-approved but before you send in your full application, you can usually make small changes that won’t affect your pre-approval. However, you should talk to your lender before making big changes to the amount.
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After application, but before loan approval: You may be able to modify your loan amount, but you’ll likely have to resubmit documents and go through underwriting again. Expect delays.
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After loan approval: While possible, changes at this stage are more difficult. You may have to cancel your current loan and reapply.
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After the final loan documents are made: Unless an error was made, it’s very unlikely that you can change the amount of your mortgage at this point.
The earlier in the process you want to make changes, the simpler it will be. Once your loan is locked in and approved, switching gears becomes problematic.
Factors That Allow Loan Amount Changes
Whether you can adjust your mortgage loan amount depends on several factors:
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Your lender’s policies: Some lenders allow modifications, some don’t. Ask up front about their flexibility.
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Loan program requirements: FHA loans offer more leeway than conventional loans to make changes.
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Timing of your request: Asking early in the process gives you the best odds.
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Reason for change: Increasing your loan for valid reasons like repairs may be allowed.
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Impact on approval: Lowering the amount could mean you no longer qualify.
Essentially, if your request doesn’t create headaches for your lender or put your approval at risk, they are more likely to grant it. Don’t make a change that will derail the underwriting process.
How Will Changing Your Loan Amount Affect You?
Before requesting a modified loan amount, consider how it could impact your mortgage:
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Interest rate: Depending on market rates, your rate could change with your new loan amount.
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Monthly payment: Your payment will decrease or increase along with loan size changes.
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Closing timeline: Processing changes may delay your closing date.
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Loan approval: Altering your amount significantly could put your approval at risk.
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Relationships: Frequent changes could frustrate your lender, real estate agent and seller.
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Fees: You may incur extra loan processing fees when changes are made.
While a small bump in loan size probably won’t rock the boat, drastic adjustments could have ripple effects on your transaction. Proceed with caution.
Alternatives to Changing Your Mortgage Amount
If changing your loan amount seems too troublesome, consider these options instead:
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Adjust down payment: Putting down slightly more or less could give you flexibility without resizing your whole loan.
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Leave savings as buffer: Keep extra savings to make repairs or modifications after closing.
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Pay extra each month: Adding a little extra principal each payment builds equity faster.
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Refinance later: Once in your home, you can potentially refinance to a better loan amount.
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Take out home equity loan: After a few years of homeownership, equity loans offer flexible financing.
These tactics allow you to stick with your current loan amount but still make smart financial moves down the road.
Tips for Determining Your Loan Amount
To avoid having to make adjustments, put careful thought into calculating your ideal mortgage amount:
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Crunch the numbers with your lender early in the process.
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Get pre-approved for the maximum you can afford in case you need flexibility later.
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Know your budget to identify payment you’re comfortable with.
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Research down payment assistance programs that allow smaller loans.
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Account for rate and fee changes if your amount shifts.
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Discuss implications of potential changes with your lender upfront.
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Have a financial buffer in savings for unexpected expenses.
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Be disciplined about your spending habits after your offer is accepted.
With thorough preparation from the start, you can minimize the need to modify your loan amount down the road.
The Bottom Line
Changing your mortgage loan amount before closing is possible in many cases if done early enough. But adjustments can delay your timeline, affect your rate and fees, or jeopardize approval. Weigh your options carefully, discuss implications with your lender, and have backup plans in place. With some strategic planning early on, you can avoid surprises and stick with your original loan amount.
Adjust the Purchase Agreement
You’ll also need to notify the seller about the down payment change if it’s going to delay the transaction or push the closing date beyond the initial agreed-upon timeline. In addition, you’ll also need to let them know so both of you can sign an updated purchase agreement that reflects the new down payment amount. It’ll also take time for your realtor to draft a new purchase agreement, which can further delay the closing process.
Sign an Updated Closing Disclosure
On the lender’s end, they’ll issue a revised Closing Disclosure after they’ve reviewed your financial information and calculated the new loan terms. The new disclosure will detail the updated down payment, closing costs, monthly payments, and other terms and conditions of the loan.
Switching Mortgage Lenders Before Closing May COST You
FAQ
Can I change the loan amount before closing?
You can change your down payment, whether you’re paying points, pretty much anything about the loan right up until closing (unless one of those changes triggers a new 3 day waiting period) so as long as you’re not trying to close like tomorrow you can just tell your loan officer what you’d like to change.
Can you increase down payment before closing?
For example, if you’re planning to increase your down payment, you’ll likely need to share updated bank statements verifying that you have the necessary funds to cover the higher cost. The lender may also need to check your credit score again to make sure you can still get the loan with the new terms.
Can I change my mortgage rate before closing?
If rates go down prior to your loan closing and you want to take advantage of a lower rate, you may be able to pay a fee and relock at the lower interest rate. This is called “repricing” your loan. Before you can close on your loan, you’ll need to lock in a final interest rate.
Can you change loan amount after pre-approval?
Yes, it is possible to request the lender take a second look at your preapproval amount. Be sure to assess your budget to confirm you can truly afford a higher loan amount before contacting the lender, however.