How to Qualify for a Mortgage

Step-by-step process to qualify for a mortgage

If you’re planning to buy a home, the mortgage products available to you will depend largely on your credit score, your ability to provide a down payment and your debt-to-income (DTI) ratio. Your options also vary depending on whether you are a veteran or a buyer in a rural area.

Get in touch with a trusted loan officer at your financial institution who can help evaluate your situation to find which loan options you’re eligible for.

However, the basic steps to qualify for a mortgage typically follow the pattern below.

Step 1: Preparation

Start by getting your finances in order so you know what lenders will see.

• Check your credit and dispute errors.
• Build a realistic monthly housing budget.
• Gather documents like pay stubs, W-2s, tax returns and bank statements.

This groundwork helps you spot issues early and strengthens your application.

Step 2: Prequalification

Meet with a lender to estimate how much you may be able to borrow. This informal review looks at your income, credit and basic finances, but it isn’t an official approval. Use the estimate to refine your home-search budget and identify any areas to improve before applying.

Step 3: Mortgage application

Submit a full application once you’re ready to move forward. Provide detailed financial documents, authorize credit checks and answer lender questions promptly. During this stage, lenders verify your income, employment, assets and debts to ensure the information matches what you submitted.

Step 4: Loan processing and underwriting

The lender reviews every aspect of your financial profile. It’ll order a property appraisal, confirm your documentation and analyze your credit history, DTI and savings. Underwriters check that you meet the loan program guidelines and that the home’s value supports the loan amount.

Step 5: Approval and closing

If approved, you’ll receive a loan commitment outlining final conditions. Complete last-minute requests, then review and sign closing documents. You’ll pay the required fees, provide any remaining down payment funds and finalize your loan. Once everything is recorded, you officially receive the keys to your new home.

» READ MORE: How to apply for a mortgage

What you need to qualify for a mortgage

Though the basics are often similar, mortgage requirements differ depending on the type of loan.

For borrowers with excellent credit and the ability to offer a significant down payment, conventional loans may offer lower interest rates. However, for first-time homebuyers with little cash on hand, FHA loans may be enticing because they don’t require a large down payment or a high credit score.

If you’re a veteran, VA loans are a great option — unlike conventional loans, they don’t have a mortgage insurance requirement, even if you put down less than 20%. USDA loans also provide an affordable option for many, though these are only available in specific rural areas.

Here’s what you need to qualify for each loan type.

Conventional loans

Conventional mortgage loans are home loans from private lenders, like banks or credit unions, that are not backed by government agencies. This means they tend to have stricter lending requirements — though these requirements can vary by lender.

• Credit score: Because conventional loans have tighter loan requirements, the minimum credit score to qualify for one is usually at least 620. Your credit score can also affect the interest rate you’ll pay on the loan. In general, the higher your credit score, the lower the interest rate.
• Debt-to-income ratio: Lenders use the DTI ratio to evaluate applicants for all loan products, especially mortgage loans. It’s calculated by adding all regular debt payments (car loans, student loans, etc.) and dividing that total by your gross monthly income (before taxes). For the most part, banks want your DTI to be below 36%, though the exact percentage can vary by lender. In other words, if your DTI is higher than 36%, you won’t necessarily be denied a loan. It could mean that other requirements will apply, such as a higher down payment or a higher credit score.
• Down payment: Your down payment is the amount of cash you put down upfront, based on a percentage of the home’s sales price. The minimum down payment for conventional loans is typically 3%. So, if you plan to purchase a $300,000 house, you’ll need to offer $9,000 cash as a down payment in order to obtain a conventional mortgage. Borrowers can avoid paying mortgage insurance premiums if they make a down payment of at least 20%.
• Loan-to-value ratio: The LTV ratio reflects the portion of the home’s value that is not covered by a down payment. It’s calculated by dividing the mortgage loan amount by the home’s appraised value. Lenders typically look for an LTV of 80% or lower, which means you’re financing 80% or less of the home’s value. Increasing your down payment can help decrease the LTV.

Jumbo loans

Jumbo loans, also called “nonconforming loans,” are mortgages that exceed the conforming loan limits. In 2025, the conforming loan limit in most U.S. areas is $806,500. Buyers seek jumbo loans when they want to purchase higher-priced homes, such as luxury properties.

These loans carry a greater default risk, so the interest rates are typically higher than those of conforming loans. The loan requirements in general are stricter.

• Credit score: Jumbo loans are considered riskier for lenders, so lenders require higher credit scores than for conventional loans. Most financial institutions require a credit score of at least 680 for a jumbo loan, although 740 is typical for a jumbo loan borrower. Usually, the higher the loan amount, the higher the credit score required.
• Debt-to-income ratio: As with conventional loans, jumbo loan lenders prefer a DTI ratio of 36% or lower. However, some lenders will allow a higher DTI ratio if you have a good credit score or a large down payment.
• Down payment: Down payment requirements for jumbo loans are also higher than for conventional loans — typically between 10% and 15% of the home’s appraised value. Also, like with conventional loans, borrowers can avoid paying mortgage insurance premiums if they put down at least 20%.
• Loan-to-value ratio: Generally, an LTV of 80% on a jumbo loan is ideal, but lenders may allow a higher LTV, depending on the down payment amount.

FHA loans

FHA loans are backed by the Federal Housing Administration (FHA) and offered by FHA-approved lenders. These loans are popular with first-time homebuyers because they tend to have lower down payment and credit score requirements.

• Credit score: The minimum credit score for an FHA loan is 500, which is significantly lower than for a conventional loan. However, some FHA lenders require higher scores, typically 500 to 580.
• Debt-to-income ratio: Your DTI ratio should be 43% or less if you’re applying for an FHA loan, though this requirement can vary depending on your credit score.
• Down payment: The down payment requirement is tied to your credit score. If you have a score of 580 or higher, you only have to put down 3.5%. If your credit score is between 500 and 579, the down payment requirement jumps to 10%.
• Loan-to-value ratio: Because the down payment requirements are lower with FHA loans, the LTV ratio can be higher.

USDA loans

USDA loans are backed by the U.S. Department of Agriculture (USDA). USDA loans are used to purchase or refinance a home in rural areas. This program was created to encourage homeownership for low- to moderate-income earners.

• Credit score: While the USDA doesn’t set a fixed credit score requirement, lenders who offer USDA loans may require at least a 640 score. As with other loan options, if your credit score falls below a minimum threshold, the lender may require a higher down payment.
• Debt-to-income ratio: Typically, the USDA sets the maximum DTI ratio at 41%, but borrowers with higher credit scores and the ability to prove stable employment could have some flexibility with this cap.
• Down payment: USDA loans generally do not require a down payment.
• Loan-to-value ratio: Because there’s no down payment requirement, you can finance the full sales price.

VA loans

VA loans are mortgage loans available to active-duty military personnel, veteran military service members and surviving spouses. These loans are insured by the U.S. Department of Veterans Affairs. To apply, you’ll need to show a VA Certificate of Eligibility.

• Credit score: VA loans do not have a set credit score requirement. However, borrowers with scores above 620 have a better chance of being approved for a VA loan.
• Debt-to-income ratio: The VA doesn’t set a maximum DTI ratio, but most lenders use the benchmark of 41% to determine eligibility.
• Down payment: There are no down payment requirements, as long as the home’s sales price doesn’t exceed the appraised value.
• Loan-to-value ratio: As with USDA loans, VA loans do not require a down payment. You can finance the full purchase price of the home.

» COMPARE: Types of mortgage loans

Other factors affecting mortgage qualification

There are other factors that affect mortgage loan qualification, like proof of employment and assets. Lenders will ask for documentation that shows you’re currently employed and that you earn a certain income. Lenders may also call your employer to verify your salary, while self-employed individuals must provide tax returns.

Required documentation typically includes:

• Income and employment: Recent pay stubs, W-2s and tax returns from the most recent two years; employer verification as needed.
• Assets: Account statements from checking, savings and investment accounts showing funds for your down payment, closing costs and any required cash reserves.
• Identity and credit: A current driver’s license, Social Security number and signed authorization allowing the lender to pull your credit report.

If you’re applying for a mortgage with a spouse or partner, they’ll need to provide the same documentation.