Qualifying for a mortgage involves more than meeting one credit score or income requirement. Lenders generally review your credit history, income, monthly debts, available funds and the property you plan to finance.
The requirements also depend on the mortgage. FHA, VA, USDA, conventional and jumbo loans use different underwriting standards, and the requirements for a primary residence can differ from those for a second home or investment property.
Understanding those factors can help you compare mortgage options and identify which parts of your finances are most likely to affect your application.
Mortgage Requirements Basics
| Requirement |
What Lenders Review |
Why It Matters |
| Credit |
Credit scores, payment history, recent credit activity and major credit events |
Helps determine eligibility, underwriting and loan pricing |
| Income and DTI |
Qualifying income and recurring monthly debt |
Shows whether your income can support the proposed housing payment and other debts |
| Down payment |
Purchase price, loan amount and eligible sources of funds |
Affects your loan-to-value ratio and which programs may be available |
| Cash reserves |
Eligible assets remaining after closing |
Some transactions require reserves, while reserves can also strengthen certain applications |
| Property and occupancy |
Property type and whether it will be your primary residence, second home or investment property |
Different occupancy and property types have different financing rules |
What Do You Need to Qualify for a Mortgage?
Mortgage underwriting looks at your finances as a whole. A weakness in one area does not always prevent approval, but each loan program has eligibility requirements that must be met.
The main factors are credit, qualifying income, debt-to-income ratio, down payment or equity, assets and the property itself.
Credit History
Lenders review more than the number shown as your credit score. Your payment history, balances, recent credit inquiries, collections and major events such as bankruptcy or foreclosure can also affect underwriting.
Credit standards vary by program and underwriting method. Lenders can also apply their own requirements beyond agency guidelines.
Income and Employment
Income generally needs to be documented, stable and reasonably expected to continue. The documentation required depends on the source of income.
A salaried employee may have a relatively straightforward file, while self-employment, commission, overtime, bonuses, seasonal work or other variable income can require a longer history or additional documentation.
Debt-to-Income Ratio
Your debt-to-income ratio, or DTI, compares qualifying monthly debt payments with gross qualifying monthly income.
Mortgage underwriting typically includes the proposed housing payment along with debts such as auto loans, student loans, credit cards and other recurring obligations. Maximum acceptable DTI depends on the loan program, underwriting method and other characteristics of the application.
A debt-to-income calculator can help you estimate your ratio before applying.
Down Payment and Cash to Close
Your down payment affects how much you need to borrow and your resulting loan-to-value ratio. Some programs allow little or no down payment for eligible borrowers, while other transactions require substantially more.
You may also need funds for closing costs, prepaid expenses and initial escrow deposits. Acceptable sources of funds depend on the mortgage program and transaction.
Property and Occupancy
The home also has to meet the requirements of the loan. Lenders consider the type of property, its value and how you intend to use it.
Primary residences generally have access to the broadest range of mortgage programs. Requirements can become more restrictive for second homes, investment properties and certain property types. You can also compare the types of homes you can finance by loan type.
Mortgage Requirements by Loan Type
There is no single set of mortgage qualification requirements. FHA, VA and USDA loans operate under federal program rules, while conventional loans generally follow requirements established by Fannie Mae or Freddie Mac when they are eligible for sale to those enterprises.
| Loan Type |
Down Payment |
Credit |
Other Key Requirements |
| Conventional |
As little as 3% for certain eligible primary-residence loans |
Depends on underwriting method. Fannie Mae DU does not use a fixed minimum score, while manually underwritten loans have score requirements. |
Income, DTI, assets, occupancy, property and loan-to-value requirements apply. |
| FHA |
As little as 3.5% with an FHA minimum decision credit score of at least 580. A 10% minimum applies with scores from 500 through 579. |
FHA minimum decision credit score rules affect maximum financing. Lenders may apply additional standards. |
Primary residence, FHA property requirements and mortgage insurance apply. |
| VA |
Typically no down payment with full entitlement when the purchase price does not exceed the appraised value |
VA does not establish a minimum credit score, although lenders can. |
VA eligibility, qualifying credit and income, residual income and occupancy requirements apply. |
| USDA |
No down payment for eligible guaranteed-loan borrowers |
Credit is evaluated through USDA underwriting requirements and lender standards. |
Household income limits, property-location eligibility and primary-residence requirements apply. |
| Jumbo |
Varies by lender and loan characteristics |
Varies by lender |
Requirements are lender-specific because jumbo loans are not subject to one universal conforming underwriting standard. |
Fannie Mae's current Selling Guide states that Desktop Underwriter does not require a fixed minimum credit score. Manually underwritten conventional loans continue to use score requirements tied to the transaction.
FHA requirements are governed by HUD's Single Family Housing Policy Handbook 4000.1. HUD's current policy continues to tie FHA maximum financing to the borrower's minimum decision credit score.
VA states that it does not set a minimum credit score for VA-backed purchase loans, although lenders evaluate credit and may establish their own standards. Eligibility also depends on qualifying military service or another eligible status.
USDA's Single Family Housing Guaranteed Loan Program offers 100% financing to eligible borrowers purchasing a primary residence in an eligible rural area. Applicants must also meet the program's household income requirements.
Mortgage Insurance Requirements
Mortgage insurance and program fees can differ significantly by loan type.
Conventional loans may require private mortgage insurance when the loan-to-value ratio exceeds applicable thresholds. FHA loans use mortgage insurance premiums, commonly called MIP, including upfront and annual mortgage insurance charges.
VA loans do not require monthly PMI or FHA-style MIP, although a VA funding fee can apply unless the borrower qualifies for an exemption. USDA guaranteed loans use an upfront guarantee fee and an annual fee rather than conventional PMI.
The mortgage insurance requirements for different loan types can affect both your upfront costs and monthly payment. FHA MIP and conventional PMI also operate differently, so PMI and MIP are not interchangeable.
For conventional financing, the length of time you pay mortgage insurance can depend on your original loan-to-value ratio, payment history and applicable cancellation rules. The rules governing how long PMI lasts differ from FHA mortgage insurance requirements.
Getting Preapproved for a Mortgage
Preapproval is an early review of your financial information that can provide an estimate of the mortgage amount and program you may qualify for.
The lender may review your credit, income, assets, debts and other application information. The exact documentation and level of review can vary, so a preapproval is not the same as final mortgage approval.
The mortgage preapproval process generally provides more underwriting information than a basic prequalification. Understanding the difference between preapproval and prequalification can help you determine what a lender has actually reviewed.
Once issued, a mortgage preapproval letter can document the preliminary financing amount for which you were evaluated. How long the process takes depends on the lender, your application and the documentation required, so preapproval timing can vary.
Credit challenges do not necessarily prevent you from being evaluated. Whether you can get preapproved with bad credit depends on the loan program, the lender's requirements and the rest of your financial profile.
Qualifying for a Mortgage With Credit Challenges
A low credit score, bankruptcy or foreclosure can change which programs are available and when you can qualify, but these events do not necessarily prevent you from ever getting another mortgage.
If your credit score is the primary concern, compare mortgage options for borrowers with bad credit. Government-backed and conventional programs can have different credit and underwriting standards.
Major credit events have additional requirements. Getting a mortgage after bankruptcy or a mortgage after foreclosure can involve program-specific waiting periods, documentation requirements and underwriting review.
A lender may also apply standards beyond the minimum requirements published by an agency or mortgage investor. These lender-specific requirements are often called overlays.
Qualifying With Debt or Nontraditional Income
High debt or an income source that requires additional documentation can make mortgage underwriting more complex without automatically preventing approval.
Borrowers with substantial monthly obligations can compare mortgage options for a high debt-to-income ratio. Student loans also affect DTI calculations, although the amount used for underwriting can vary by mortgage program. There are separate considerations for choosing a mortgage with student loan debt and understanding how student loans affect mortgage approval.
Income does not have to come from a traditional salary. Borrowers may be able to qualify using retirement income, variable employment income, self-employment income or other eligible sources when the income meets the applicable documentation and continuance requirements.
That can include households seeking a mortgage during retirement or a joint mortgage using only one qualifying income.
Starting a new position does not automatically prevent mortgage approval either. The rules for getting a mortgage with a new job depend on the type and stability of the income, while changing jobs during the mortgage process can require the lender to verify the updated employment information.
Changes in household finances can also affect qualification after a separation or divorce. Borrowers may need to document income, debts, support obligations and ownership interests when buying a home after divorce.
Borrowers whose income or financial profile does not fit standard agency underwriting may also encounter non-QM mortgages. Non-QM requirements vary significantly by lender and product.
Mortgage Reserve Requirements
Mortgage reserves are eligible assets that remain available after the transaction closes. They are commonly expressed as a number of months of housing payments.
Not every mortgage requires reserves. The amount, if any, can depend on the loan type, property type, number of financed properties and overall risk profile.
Even when reserves are not specifically required, available savings can affect underwriting in some circumstances. You can review what lenders count as mortgage reserves and estimate available funds with a mortgage reserves calculator.
Bottom Line
Mortgage requirements depend on both your financial profile and the loan you choose. Lenders generally review credit, qualifying income, debts, assets, down payment, occupancy and the property, then apply the requirements of the mortgage program and their own underwriting standards.
Meeting one minimum requirement does not guarantee approval. Mortgage qualification is based on the complete application and the rules that apply to the specific transaction.
Frequently Asked Questions
What Credit Score Do I Need to Buy a House?
There is no single credit score requirement for every mortgage. FHA uses minimum decision credit score thresholds for maximum financing, VA does not set a program-wide minimum score and Fannie Mae's Desktop Underwriter does not use a fixed minimum credit score. Lenders can apply additional credit requirements.
What DTI Do Mortgage Lenders Allow?
Maximum debt-to-income ratios vary by loan program and underwriting method. For example, Fannie Mae allows DTI ratios up to 50% for eligible loans underwritten through Desktop Underwriter, while manually underwritten conventional loans use lower limits. FHA, VA and USDA each use their own underwriting standards.
How Much Money Do I Need in Savings to Get a Mortgage?
The amount depends on your down payment, closing costs, prepaid expenses and whether your loan requires cash reserves after closing. Some transactions have no specific reserve requirement, while others require multiple months of housing payments in eligible assets.
Can I Qualify for a Mortgage With a New Job?
Potentially. A recent job change does not automatically disqualify you. The lender evaluates whether the new income meets the documentation, stability and continuance requirements for the loan program and may need to verify your employment before closing.
What Can Disqualify You From Getting a Mortgage?
A mortgage can be denied when the application does not meet the loan's requirements for credit, qualifying income, debt, assets, property eligibility or other underwriting standards. The reason varies by application, and failing one lender's requirements does not necessarily mean every mortgage program has the same requirement.
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