FOR BUYERS - FINANCING
How to Qualify for a Home Loan
What lenders look for, how to get pre-approved, and how to strengthen your application before you apply.
IN THIS GUIDE
1.
Credit score & debt-to-income
Here’s the number most people don’t know: you don’t need perfect credit to buy a home. FHA loans allow scores as low as 580 to qualify for a 3.5% down payment, and even scores between 500 and 579 can work with 10% down. Lenders also look at your debt-to-income ratio — generally aiming for 43% or below, meaning your monthly debts (including the new mortgage) shouldn’t eat up more than that share of your income.
Those numbers aren’t hard walls, either. A strong track record of on-time rent payments, solid savings, or steady employment can help a lender approve you even outside the “ideal” range. If you’ve been told “no” before, it’s worth finding out what your actual numbers look like now — not what they were the last time someone turned you down.
2.
Pre-qualified vs. pre-approved
These two terms get used interchangeably, but they’re not the same thing — and the difference matters. A pre-qualification is a quick estimate: you share your income, debts, and assets, and a lender gives you a ballpark of what you might be able to borrow. It’s a useful starting point, but it’s not verified and it doesn’t mean much to a seller.
A pre-approval goes further. The lender actually pulls your credit and verifies your documents, then gives you a conditional commitment for a specific loan amount. That’s the version sellers take seriously, and it’s the one you want in hand before you start touring homes — it tells you (and everyone else) what you can really afford, not just what you might.
3.
Documents your lender will want
Every lender’s checklist looks a little different, but most start in the same place: recent pay stubs, W-2s or tax returns from the last two years, and two to three months of bank statements. If you’re self-employed, expect to provide more — usually tax returns and profit-and-loss statements covering a longer stretch. Lenders also verify employment directly, so don’t be surprised by a call or email to your workplace.
If part of your down payment is coming from a gift — a parent helping out, for example — you’ll need a signed gift letter confirming it’s not a loan you’ll have to repay. And if your credit report shows old collections or late payments, be ready to explain them in writing. None of this is about disqualifying you; it’s about giving the lender a full, accurate picture so they can say yes with confidence.
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4.
Loan types: FHA, VA & conventional
FHA loans are usually the most forgiving entry point — a 580 credit score gets you 3.5% down, and even scores between 500 and 579 can work with 10% down. VA loans are the strongest option if you’ve served: no down payment required, no monthly mortgage insurance, and while the VA itself sets no minimum score, most lenders look for something around 620. Conventional loans sit on the other end — typically requiring at least a 620 score and 5% down, with the best rates reserved for scores closer to 700 and up.
None of these is automatically “the” right choice. It depends on your credit, your service history, and how much you have for a down payment. Part of getting qualified isn’t picking a loan type off a list — it’s figuring out which one actually fits where you stand today.
5.
Locking your rate
A rate lock freezes your interest rate for a set window — usually 30, 45, or 60 days — so it doesn’t move while your loan is being processed. Without it, you’re exposed: if rates tick up before closing, your monthly payment could climb along with them, even after you thought you had a deal in place.
Timing matters here. Lock too early and you might pay to extend it if your closing gets delayed; lock too late and you’re gambling on where rates go in the meantime. Some lenders also offer a “float-down” option, letting you take advantage if rates drop after you’ve locked. Your loan officer should walk you through the tradeoffs — but it’s worth asking about explicitly, since not every lender brings it up on their own.
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