What lenders actually check before they say yes
Lenders do not use a single checklist that works the same way for everyone. Instead, they look at your credit score, income, debt-to-income ratio, down payment, and the property itself. Each lender weights these differently, and some programs (like FHA loans or loans backed by the Department of Veterans Affairs) have their own rules that differ from conventional mortgages.
The fastest way to know where you stand is to get a pre-qualification or pre-approval from an actual lender — not an online calculator. A lender will pull your credit report, ask about your income and debts, and tell you a dollar amount they would consider lending. This takes a few days and costs nothing.
What follows is what lenders are looking for in each area, what the typical thresholds are, and what happens if one number is weaker than others.
Key Takeaways
- Lenders look at credit score, income, existing debt, down payment amount, and the property value — not just one of these things.
- A credit score of 620 or higher opens conventional loan options; scores below that narrow your choices to FHA or state-specific programs.
- Your debt-to-income ratio (all monthly debt payments divided by gross monthly income) usually cannot exceed 43 percent for most loans.
- A down payment of 20 percent or more removes the requirement to pay mortgage insurance, but loans with 3 to 5 percent down exist if your other numbers are strong.
- Getting pre-approved by a lender takes a few days and shows you the actual amount they will lend, not an estimate from an online tool.
Credit score and what it means for your options
Your credit score is a three-digit number (typically 300 to 850) that reflects your history of paying bills on time and managing debt. The three major credit bureaus — Equifax, Experian, and TransUnion — each calculate a score based on your credit report.
Conventional mortgages (the most common type, not backed by a government agency) usually require a credit score of 620 or higher. Scores between 620 and 679 are possible but often come with a higher interest rate. Scores of 680 and above typically get better rates. If your score is below 620, conventional loans are unlikely; FHA loans (insured by the Federal Housing Administration) may be available with a score as low as 580, though 640 or higher is more common.
You can check your credit score for free once per year from each bureau at annualcreditreport.com. Many credit card companies and banks also show your score free in their apps or online portals. If you find errors on your report, you can dispute them directly with the bureau — the process is free and takes 30 to 45 days.
Income and how lenders verify it
Lenders want to see that you earn enough to pay the mortgage, property taxes, insurance, and any other debt you carry. They do not count income you have not been earning for at least two years, with some exceptions for recent job changes in the same field.
For W-2 employees, lenders ask for recent pay stubs and tax returns (usually the last two years). Self-employed borrowers need two years of tax returns and sometimes a profit-and-loss statement. If you receive income from Social Security, pensions, or investments, bring documentation of those as well. Lenders verify income by contacting your employer directly or by reviewing the documents you provide.
Income that is irregular or seasonal (like commission or bonus pay) is averaged over the past two years. If you recently changed jobs, some lenders will count income from the new job if you work in the same field and have a written offer letter.
Debt-to-income ratio: the math that matters most
Your debt-to-income ratio is the total of all your monthly debt payments divided by your gross monthly income (before taxes). Lenders use this to decide how much mortgage they can safely give you.
Most conventional loans require a debt-to-income ratio of 43 percent or lower. This means if you earn $5,000 per month before taxes, your total monthly debt payments (including the new mortgage) cannot exceed $2,150. FHA loans sometimes allow up to 50 percent, depending on the lender and your credit score.
Monthly debt includes car loans, student loans, credit card minimums, child support, and any other regular payments. It does not include utilities, groceries, or insurance (unless you are paying off a past-due insurance bill). The new mortgage payment — principal, interest, property taxes, and homeowners insurance — is included in the calculation.
If your ratio is too high, you have two options: pay down existing debt before applying, or look for a less expensive property. Paying off a car loan or credit card can lower your ratio enough to may have access to for a larger mortgage.
Down payment: what you need and what you do not
The down payment is the cash you put toward the purchase; the lender finances the rest. Down payment requirements vary by loan type.
Conventional loans typically require 5 to 20 percent down. If you put down less than 20 percent, you pay private mortgage insurance (PMI) — a monthly fee added to your mortgage payment that protects the lender if you default. PMI usually costs 0.5 to 1 percent of the loan amount per year, divided into monthly payments. Once you have paid down the loan to 80 percent of the original home value, you can request to have PMI removed.
FHA loans require a minimum down payment of 3.5 percent but charge mortgage insurance premiums instead of PMI — an upfront fee (1.75 percent of the loan amount) plus an annual fee. VA loans (for military members and veterans) often require zero down payment. USDA loans (for rural properties) also allow zero down for borrowers who meet income limits.
If you do not have a large down payment saved, FHA or USDA programs may be faster to reach than waiting to save 20 percent. The trade-off is paying insurance costs each month.
The property itself and the appraisal
Lenders do not just look at you — they also look at the house. They order an appraisal, which is an independent assessment of the property's market value. If the appraisal comes in lower than the purchase price, the lender will only finance up to the appraised value. You would need to pay the difference out of pocket, renegotiate the price, or walk away.
Lenders also check that the property meets basic safety and structural standards. A home with major code violations, unpermitted additions, or severe damage may not be financed at all, or only at a higher interest rate.
The appraisal usually takes one to two weeks and costs $400 to $600 (sometimes paid by the buyer, sometimes by the lender depending on the loan type and your agreement with the seller).
Getting pre-approved: the next step
A pre-approval is a lender's written statement that they will lend you up to a certain amount, based on your financial information. It is different from a pre-qualification, which is an estimate based on information you provide but not verified.
To get pre-approved, contact a bank, credit union, or mortgage lender directly. You will need to provide your Social Security number (so they can pull your credit report), recent pay stubs, tax returns, and a list of your debts and assets. The lender will verify your income with your employer and pull your credit report. Pre-approval usually takes three to five business days.
A pre-approval letter shows real estate agents and sellers that you are a serious buyer and have already been vetted by a lender. It also tells you the actual interest rate you would pay (or the range, since rates change daily) and the maximum loan amount you may have access to for.
What to do if you do not meet the typical thresholds
If your credit score is below 620, your debt-to-income ratio is above 43 percent, or you have little down payment saved, you still have options — they just take more time or cost more.
A credit score below 620 can sometimes be improved by paying down credit card balances (which lowers your credit utilization) or disputing errors on your credit report. Even a 20 to 30-point increase can open conventional loan options. This usually takes two to three months.
If your debt-to-income ratio is too high, paying off one or two smaller debts before applying can make the difference. A $300 monthly car payment eliminated lowers your ratio by 6 percent if you earn $5,000 per month.
If you cannot save a 20 percent down payment, FHA loans with 3.5 percent down or USDA loans with zero down may work if your income and credit score are acceptable. The cost is higher (mortgage insurance), but you can buy sooner.
Frequently Asked Questions
Can I get a mortgage with a credit score below 600?
FHA loans are available with scores as low as 580, though most lenders prefer 640 or higher. Conventional mortgages typically require 620 or above. If your score is below 580, focus on paying down credit card balances and disputing any errors on your credit report — both can raise your score within a few months.
What counts as debt when lenders calculate my debt-to-income ratio?
Monthly debt includes car loans, student loans, credit card minimum payments, child support, and any other regular obligations. The new mortgage payment is also included. Utilities, groceries, and insurance do not count unless you are paying off a past-due bill.
Do I need 20 percent down to buy a home?
No. Conventional loans allow 5 to 20 percent down; FHA loans allow 3.5 percent; VA and USDA loans allow zero down. With less than 20 percent down, you pay mortgage insurance, which adds to your monthly payment. The trade-off is buying sooner rather than waiting to save more.
How long does pre-approval take?
Pre-approval usually takes three to five business days once you submit your documents. The lender will pull your credit report, verify your income with your employer, and review your assets and debts. You will receive a written letter stating the loan amount and interest rate range.
What happens if the appraisal comes in lower than the purchase price?
The lender will only finance up to the appraised value. You can pay the difference in cash, renegotiate the price with the seller, or walk away from the deal. This is why getting pre-approved before making an offer helps — you know your lender's limits before you commit.