Buying your first home in 2026 can mean more upfront prep than many buyers expect.
Use this checklist to understand what lenders typically evaluate, how much to save, and the timeline from pre-approval to closing. You will also see tradeoffs that can expand your options without stretching your budget.
First-Time Homebuyer Financial Requirements
A first-time homebuyer is often defined as someone who has not owned a principal residence in the past three years.
Lenders typically want to see stable income, manageable monthly debts, strong credit, and enough cash for a down payment. Many lenders prefer a two-year employment and income history, though acceptable documentation varies by borrower type and income sources.
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Requirement
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Typical Standard (Varies By Program And Lender)
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Credit score
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Many conventional approvals start around 620, stronger scores tend to price better
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Employment
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Two years of steady, documentable income is common
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Debt-to-income
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Often under the low-40% range, with exceptions by program and compensating factors
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Cash on hand
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Down payment, closing costs, prepaids, and sometimes reserves
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Down Payment Amounts And Minimums
Down payment minimums vary by loan type and eligibility.
Conventional loans generally require a 5% down payment, although first-time homebuyers may qualify for a down payment as low as 3%. If you put less than 20% down on a conventional loan, PMI is typically required. Under the Homeowners Protection Act, borrowers can request PMI cancellation at 80% LTV and PMI must automatically terminate at 78% of the original value if payments are current.
FHA loans can have down payment requirements as low as 3.5% for buyers with a credit score of 580 or higher. If you have a credit score of between 500 and 579, you’ll need a 10% down payment. FHA loans have mortgage insurance premiums (MIP) that last the life of the loan if you put less than 10% down.
VA loans generally don’t require a down payment, but eligibility is limited and a one-time funding fee is required unless you qualify to have it waived. USDA loans also have no down payment requirement, but eligibility is limited by both area and income.
Credit Scores And Income Verification
Credit score affects approval, pricing, and mortgage insurance costs. Exact requirements vary, but 620 is a common minimum benchmark for conventional loans.
Lenders verify income by reviewing documents that match how you are paid. Those include:
- Pay stubs and W-2s for W-2 employees
- Tax returns and year-to-date statements for self-employed borrowers or variable income
- Bank statements to verify assets and cash-to-close
A practical approach is to treat your pre-approval as a moving target and update it after major changes, including debt payoffs, down payment increases, or credit improvements.
Documentation Needed For Mortgage Pre-Approval
Pre-approval is a lender’s conditional confirmation of how much you can borrow based on a documentation review. It helps you set a realistic budget and can strengthen offers.
Pre-Approval Checklist
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Document
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Purpose
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Government ID
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Confirms identity
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Two years of W-2s or 1099s
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Verifies earnings history
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Recent pay stubs (30–60 days)
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Confirms current income
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Two months of bank statements
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Verifies assets and cash-to-close
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Two years of tax returns (as needed)
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Supports self-employment, bonuses, commissions, or rental income
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Asset statements (retirement, brokerage)
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Verifies additional funds and sourcing
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Timeline From Preparation To Closing
Timelines vary by market and lender process, but many buyers follow this sequence:
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Stage
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What Happens
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Typical Duration
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Prep and pre-approval
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Gather docs, check credit, compare options, secure pre-approval
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1 to 3 months
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Home search and offer
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Tour homes, submit offers with a pre-approval letter
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Varies widely
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Due diligence
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Inspection, repair requests, appraisal ordered by lender
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1 to 2 weeks
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Underwriting to closing
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Final approval, title work, closing disclosure, final walkthrough, sign
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Often 30 to 45 days
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Comparing Loan Types And Eligibility
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Program
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Minimum Down
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Typical Credit Range
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Mortgage Insurance
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Who Qualifies
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Conventional
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As low as 3% in some programs
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Often starts around 620
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PMI if under 20% down, cancellable under HPA rules
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Broad eligibility
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FHA
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As low as 3.5% with higher scores
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Program rules apply
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Upfront and annual mortgage insurance required (program rules apply)
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Flexible credit guidelines, loan limits apply
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VA
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0% for eligible borrowers
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Varies by lender
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No monthly mortgage insurance, funding fee may apply
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Eligible service members, veterans, some surviving spouses
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USDA
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0% for eligible borrowers
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Varies by lender
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Program fees apply
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Income and area eligibility limits
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Jumbo
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Often 10%–20%+
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Typically higher
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Varies by lender
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Higher loan amounts above conforming limits
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The Bottom Line
Getting a mortgage is a multistep process. You’ll need to meet lender requirements for credit score, income, debt-to-income ratio, and down payment to qualify. Those requirements can vary both by lender, loan type, and borrower.
Frequently Asked Questions About First-Time Homebuyer Requirements And Process
What Are The Key Requirements To Qualify As A First-Time Homebuyer?
Most lenders evaluate income stability, credit, debts, and cash-to-close. Many programs define first-time homebuyer status using a three-year lookback on principal residence ownership.
How Much Should I Save For A Down Payment And Closing Costs?
Minimum down payments can start at 0% to 3.5% depending on eligibility and program rules. Closing costs often add a few percent of the purchase price, and prepaids vary by taxes and insurance.
What Documents Are Required For Mortgage Pre-Approval?
Expect income documents, bank statements, and identification. Self-employed or variable-income borrowers often need tax returns and additional documentation.
How Long Does It Take To Buy A Home From Start To Finish?
Many buyers spend 1–3 months preparing and searching, then 30–45 days from contract to closing, though timelines vary by market and lender process.
Do I Need An Emergency Fund Beyond My Down Payment?
Keeping a separate emergency fund is a common best practice. It helps protect your budget from repairs, moving costs, and unexpected changes after closing.
