How Do I Qualify for a Mortgage?

To qualify for a mortgage, you have to pass five checks: a credit score high enough for the loan type, a debt-to-income ratio under the lender's limit, documented income that meets the loan program's requirements, enough cash for the down payment and closing costs, and an appraisal that supports the price. The thresholds depend on the loan. An FHA loan accepts a 580 score with 3.5% down, a conventional loan sold to Fannie Mae can allow a debt-to-income ratio up to 50%, and VA and USDA loans can require no down payment. Lenders can set stricter rules than the program, so the same file can be approved by one lender and turned down by another.

What are the requirements by loan type?

These are the program rules as of October 2026. Your lender's own minimums can be higher.

The rest of this article covers each check in the order a lender looks at it, then the order to check them yourself.

1. Credit score

The lender pulls your credit report and scores from the three national credit bureaus. FHA uses your middle score when there are three, the lower one when there are two, and on a joint loan the lowest score among the borrowers. For certain joint loans underwritten by hand, Fannie Mae averages the borrowers' median scores to check eligibility. Pricing uses the lowest applicable borrower score, and its automated system evaluates credit report data separately.

Your score does more than decide yes or no. It sets the down payment on an FHA loan and the price of a conventional loan. CFPB's home loan toolkit says a higher score generally gets you a lower rate and more lenders to choose from. Minimum credit scores by loan type covers the floors and how lenders' own overlays raise them.

If no borrower has a credit score, FHA and Fannie Mae both allow approval using nontraditional credit, such as a record of rent and utility payments, reviewed by hand.

2. Debt-to-income ratio

Your debt-to-income ratio (DTI) is your monthly debt payments, including the new house payment, divided by your gross monthly income. The house payment counts principal, interest, property taxes, homeowners insurance, mortgage insurance, and HOA dues.

Example: You earn $7,000 a month before taxes and pay $350 on a car loan and $250 on student loans.

• At a 43% limit: $7,000 x 43% = $3,010 for all debts, leaving $3,010 - $600 = $2,410 for the house payment.
• At a 50% limit: $7,000 x 50% = $3,500, leaving $2,900 for the house payment.
• Paying off the $350 car loan before you apply raises the house payment you can carry at 43% to $2,760.

VA adds a second test. The lender subtracts your house payment, taxes, debts, and other obligations from your income, and the amount left over must meet VA's figure for your family size and region. A DTI above 41% can still be approved with a written justification from the lender, and VA does not require that justification when the leftover income beats its figure by at least 20%. How debt-to-income ratio works covers which debts count.

3. Income and employment history

Lenders need income that is stable, documented, and likely to continue. FHA requires the lender to verify your most recent 2 years of employment and income. Fannie Mae sets no minimum income history for a fixed salary or fixed hourly pay with guaranteed minimum hours; variable base pay, where hours or the hourly rate fluctuate, requires at least 12 months. Income with an end date, such as alimony or a fixed-term benefit, must be expected to continue at least 3 years from your application.

Expect to provide recent pay stubs, W-2s, and federal tax returns. Overtime and part-time income generally need a 2-year history to count. FHA allows a gap of 6 months or more if you have been back in your line of work for at least 6 months and had a 2-year work history before the gap. If you work for yourself, lenders generally want 2 years in business and use your tax returns; see how to qualify when self-employed.

4. Down payment, closing costs, and reserves

You need cash for three things: the down payment, closing costs, and in some cases reserves, which are savings left in the bank after closing. The lender verifies the money, usually with recent bank statements.

• FHA: 3.5% down with a 580 score, figured on the lower of the price or the appraised value. On a $300,000 home, that is $10,500. With a 560 score, it is 10%, or $30,000. Savings worth 3 months of house payments left after closing count in your favor if the file is reviewed by hand.
• Conventional: as little as 3% down on a one-unit home you will live in if at least one buyer has not owned a home in the last 3 years, or through Fannie Mae's HomeReady program if your income is at or below 80% of the area median. These loans need Fannie Mae's automated approval, which also sets any reserve requirement. Less than 20% down means paying private mortgage insurance.
• VA: VA's guaranty lets most eligible buyers purchase with no down payment, as long as the price is not above the appraised value.
• USDA Guaranteed: no down payment for eligible buyers in rural areas.

Closing costs come on top of the down payment. What a down payment is covers gift funds and the trade-off between putting down less and paying more each month.

5. Appraisal and the property

After you sign a purchase contract, the lender orders an appraisal, an independent estimate of the home's market value. The loan amount is based on the lower of the price or the appraised value. If a $300,000 home appraises at $290,000, a 3.5%-down FHA loan is figured on $290,000, and you cover the $10,000 gap with more cash or by negotiating a lower price. The CFPB says you are entitled to a copy of the appraisal before closing.

The home itself must qualify. FHA requires a home you will live in that meets HUD's minimum property standards for safety and soundness, VA caps the loan at the lower of the price or the appraised value, and USDA requires the home to be in an eligible rural area.

In what order should you check before applying?

Work through these before you ask for a preapproval:

1. Pull your credit reports. Get all three at AnnualCreditReport.com and dispute any errors with each bureau. The CFPB says fixing errors could raise your scores in 30 days or less.
2. Pick the loan types your score fits. Use the table above: below 580 points to FHA with 10% down or to lenders that accept your score, while 620 or higher meets Fannie Mae's floor for a fixed-rate conventional loan even if a person, not the automated system, underwrites it.
3. Figure your DTI. Add your monthly debt payments and the house payment you want, and divide by gross monthly income. If it is over 43%, paying off a small loan or lowering your target price may get you under.
4. Gather income records. Ask your lender which pay stubs, W-2s, and tax returns your loan program and income type require.
5. Count your cash. Add the down payment, an estimate of closing costs, and a few months of house payments you can leave in savings.
6. Get preapproved by more than one lender. A preapproval letter states how much a lender is willing to lend based on the information it has checked, but the CFPB notes it is not a guaranteed loan offer. Credit checks from mortgage lenders within a short window, generally 14 to 45 days, have little or no effect on your scores. How to get preapproved walks through the documents.
7. Hold your finances steady until closing. The CFPB warns that even financing a new appliance before closing could make it harder to get the mortgage. Final approval comes after the appraisal and the underwriter's review of your updated file.

For how a mortgage works once you have it, see what a mortgage is.