To qualify for a home loan, you need to meet requirements in four main areas: credit score, income and employment, debt levels, and down payment. The exact thresholds depend on which loan type you pursue, but lenders evaluate the same core factors across the board. Here’s what you need to know to position yourself for approval.
Credit Score Minimums by Loan Type
Your credit score is the first thing a lender checks, and the minimum varies significantly depending on the loan program.
- Conventional loans require a minimum 620 credit score. These are the most common mortgages, backed by Fannie Mae or Freddie Mac.
- FHA loans allow scores as low as 580 with a 3.5% down payment. If your score falls between 500 and 579, you can still qualify but need 10% down.
- VA loans (for eligible military service members and veterans) have no official minimum score set by the VA, though most VA-approved lenders require at least 620.
- USDA loans (for buyers in eligible rural areas) also have no government-set minimum, but lenders typically require a 640 score.
A higher credit score doesn’t just help you qualify. It directly affects your interest rate. Someone with a 760 score might get a rate a full percentage point lower than someone at 640, which on a $300,000 loan translates to roughly $200 per month in savings.
Debt-to-Income Ratio Limits
Your debt-to-income ratio, or DTI, measures how much of your gross monthly income goes toward debt payments. To calculate it, add up all your monthly obligations (car loans, student loans, credit card minimums, child support, and your projected mortgage payment) and divide by your gross monthly income. If you earn $6,000 per month and your total debts including the new mortgage would be $2,400, your DTI is 40%.
Each loan type sets its own ceiling:
- Conventional: Lenders prefer a maximum DTI of 45%, though borrowers with strong credit scores and cash reserves may qualify with a DTI up to 50%.
- FHA: Maximum DTI of 43%, with a possible bump to 45% for energy-efficient homes.
- VA: Maximum DTI of 41%.
- USDA: Maximum DTI of 41%, with exceptions up to 44% for borrowers who have a credit score of at least 680, cash reserves, and two years of job stability.
If your DTI is too high, you have two levers: pay down existing debts before applying, or look at a less expensive home to reduce the projected mortgage payment.
Income and Employment Requirements
Lenders want to see that you have a stable, verifiable income. For W-2 employees, the standard expectation is two years of employment history in the same field, though you don’t necessarily need two years at the same employer. Career changes with upward progression are generally fine. What raises red flags are unexplained gaps or frequent job-hopping across unrelated industries.
If you’re self-employed, expect more scrutiny. You’ll typically need two years of tax returns showing your business income, along with a profit and loss statement. Lenders look at your net income after business deductions, not your gross revenue. This catches many self-employed borrowers off guard: if you’ve been writing off aggressively to reduce your tax bill, your qualifying income on paper may be lower than what you actually take home.
Commission-based, freelance, and contract workers face similar requirements. Lenders want to see that variable income is consistent and reliable over a two-year period. One strong year followed by a sharp decline will concern underwriters.
Down Payment Minimums
The 20% down payment is no longer a hard rule for most buyers. Here’s what each loan type actually requires:
- Conventional: As low as 3% for qualified borrowers. Programs like HomeReady and Home Possible are specifically designed for buyers with solid credit but limited savings.
- FHA: 3.5% with a credit score of 580 or higher, or 10% with a score between 500 and 579.
- VA: 0% down. No down payment is required for eligible borrowers.
- USDA: 0% down for eligible properties and borrowers.
There’s a trade-off to putting down less than 20% on a conventional loan: you’ll pay private mortgage insurance (PMI), which typically adds $50 to $150 per month for every $100,000 borrowed. PMI drops off once you reach 20% equity in the home. FHA loans carry their own version called mortgage insurance premium (MIP), which in many cases stays on the loan for its full term.
Gift funds from family members are allowed for down payments on most loan types, but the lender will require a gift letter confirming the money is not a loan that needs to be repaid.
Conforming Loan Limits
Conventional loans have a cap on how much you can borrow. For 2026, the conforming loan limit for a single-unit property is $832,750 in most of the country, as set by the Federal Housing Finance Agency. In higher-cost areas, the ceiling rises to $1,249,125. If you need to borrow more than these limits, you’ll need a jumbo loan, which typically requires a higher credit score, larger down payment, and more cash reserves.
Documents You’ll Need to Provide
Gathering paperwork before you apply speeds up the process and avoids delays. Here’s what lenders typically request:
Proof of income:
- Pay stubs from the most recent two months
- W-2 forms for the last two years
- Tax returns for the last two years (required for self-employment, rental income, and commission income)
- 1099 forms if you’re a contract worker
- Profit and loss statements or business tax returns if you own a business
- Social Security award letter, if applicable
Asset statements:
- Checking and savings account statements (typically the most recent two to three months)
- Investment and retirement account statements
- Certificates of deposit or bond statements
Additional documents (if they apply to your situation):
- Divorce decree
- Bankruptcy discharge papers
- Proof of rent payments or a copy of your lease
- Business license for self-employed borrowers
- Gift letter if using gifted funds for your down payment
Your most recent pay stub must be dated no earlier than 30 days before your application date and must show year-to-date earnings. Outdated documents are one of the most common reasons applications get delayed, so check the dates on everything before submitting.
How to Strengthen Your Application
If you’re not quite where you need to be, a few months of preparation can make a real difference. Paying down credit card balances is the fastest way to improve both your credit score and your DTI ratio simultaneously. Avoid opening new credit accounts or making large purchases on credit in the months before you apply, since new inquiries and higher balances can lower your score at the worst time.
Cash reserves also matter, even though they aren’t a formal requirement for every loan type. Lenders like to see that you have two to six months of mortgage payments sitting in savings after your down payment and closing costs. Those reserves signal that you can weather a financial disruption without missing payments.
Getting preapproved before you start house hunting tells you exactly how much you can borrow and shows sellers you’re a serious buyer. Preapproval involves a full credit pull and document review, so it carries more weight than a basic prequalification, which is often just a surface-level estimate. Most preapproval letters are valid for 60 to 90 days.