I always tell people who want to borrow money that being perfect isn't what makes you qualify for a mortgage. It's about showing that you're a good bet. I've worked in mortgage lending for almost my whole career, starting when I was 18 and working my way up through every position you can think of. I've seen thousands of approvals. Not all of the borrowers who do well have perfect finances. They are the ones who know what lenders really want and act accordingly.
The process for getting a mortgage has changed a lot, especially in 2026. Rates are around 6.19%. This is down from over 7% at the start of the year, and buyers who have been waiting are now interested again. That has led to both chances and competition.
Let me show you exactly what lenders look at when they look at your application, what the numbers need to be, and most importantly, how to make up for any weaknesses you might have.
In short, your credit score is a three-digit number that shows how good or bad you are with money. According to the Consumer Financial Protection Bureau, this score tells you how likely you are to pay back money you borrowed based on how you have used credit in the past.
Most of the time, you'll need a FICO score of at least 620 to get a regular loan. That's the minimum that most lenders use, but some portfolio lenders might go a little lower if there are other factors that make up for it. People buying their first home with a score of 620 or higher can get programs that only require 3% down.
FHA loans are more flexible. The U.S. The Department of Housing and Urban Development's FHA origination data from July 2025 says that FHA policy allows credit scores of 580 or higher for the 3.5% down payment minimum. Some lenders will accept credit scores as low as 500 for loans with equity positions of 10% or more. Now, I have to be honest with you: HUD lets scores as low as 500, but a lot of lenders set their own minimum at 580 because they want to be safe.
There is no minimum credit score set by the government for VA loans, but most lenders want a score of 620 or higher. According to current underwriting guidelines, USDA loans usually need a score of 580 or higher.
If you're buying a $350,000 home in a suburban Dallas market, this is what it looks like with real numbers. If you have a credit score of 620 and put down 5% ($17,500), you might be able to get a regular loan with an interest rate of about 6.8%. That same buyer with a score of 740 could get a rate of about 6.3%, which would save them about $120 a month or $43,000 over 30 years.
Lenders need to see proof that money is always coming in. Two years of income history is usually required, but there are exceptions for recent graduates and military members.
Lenders can look at more than just your base salary:
The most important word here is "consistent." Lenders probably won't count overtime pay if you just started getting it. If you've been getting quarterly bonuses for three years, they'll add them up and divide them by three.
People who work for themselves have to go through more checks.
Lenders usually look at two years' worth of tax returns to get an average of your net income for business owners and independent contractors. They will add back some deductions, like depreciation and home office costs, that lowered your taxable income but didn't actually cost you any money. This process can be hard. I've worked with clients who thought they made $100,000 a year, but their tax returns showed that after business deductions, they only had $62,000 in qualifying income.
Your debt-to-income ratio (DTI) tells you what percent of your gross monthly income goes toward paying off your debts. Even if you have good credit, this one number can often decide whether you get approved or not.
To find out how much you can afford to pay each month, add up all of your debts and divide that number by your gross monthly income (before taxes). Let me show you how this works:
To find the DTI, divide $2,950 by $7,500. The answer is 0.393, or 39.3%.
The Consumer Financial Protection Bureau made a big change that changes how lenders look at DTI. In their December 2020 decision, they got rid of the strict 43% DTI limit for Qualified Mortgages and replaced it with pricing-based thresholds. This means that lenders can approve borrowers with higher DTIs if other factors are strong.
If your DTI is higher than what lenders will accept, you can either pay off your debt, make more money, or look for a cheaper property. Paying off a car loan early or combining high-interest credit cards can sometimes solve the problem.
The amount you can put down has a direct effect on your chances of getting approved and your monthly payment. While everyone talks about 20% down payments, that's far from the only option.
About that house we talked about that costs $350,000:
Lower down payments come with trade-offs. With less than 20% down on a conventional loan, you'll pay private mortgage insurance (PMI), typically $50-$150 per month depending on your loan size and credit score. FHA loans require mortgage insurance premiums—both an upfront fee (currently 1.75% of the loan amount) and annual premiums added to your monthly payment.
Reserves are liquid assets you have available after closing—money sitting in checking accounts, savings accounts, or easily accessible investments. Lenders want to know that if something goes wrong (job loss, major repair, medical emergency), you won't immediately default.
Different loans and properties have different requirements:
To figure out what "one month of reserves" means, add up your monthly housing costs (including principal, interest, taxes, insurance, and HOA fees if you have them) and make sure you have that much money in cash. If you make a $2,100 monthly payment, you would need $12,600 in easily accessible accounts for six months of reserves.
The property itself is a big factor in whether lenders are willing to lend you money.
Lenders see buying a home to live in full-time as the least risky option. You are more likely to pay your mortgage on your main home than on an investment property or vacation home. You can only get government-backed loans (FHA, VA, USDA) for your main home.
Are you thinking about buying a vacation home or rental property? Expect higher credit score requirements (usually between 640 and 680), bigger down payments (between 15 and 25%), and lower maximum DTI ratios. For investment properties, a lot of lenders also want 6 to 12 months of reserves.
There are minimum property standards for FHA and VA loans. The house needs to be safe, secure, and in good shape. If the appraisal shows major problems, like a damaged roof, a bad foundation, or electrical hazards, those repairs must be made before the loan can be closed. Lenders are more willing to lend money on properties with minor safety problems, but they won't lend money on properties with major safety problems.
Let's talk about what happens when you don't meet all the requirements. I've worked with hundreds of borrowers who had one weak spot but strong reasons that made them eligible anyway.
Underwriting rules say that these things can make up for higher DTI ratios, lower credit scores, or other problems:
I had a client not too long ago who was a single parent with a credit score of 625 and a DTI of 47%. This looked like it might be too close to call. But she had $45,000 in savings (18 months' worth), had been teaching the same subject for 12 years, and was buying a house where the mortgage payment was $200 less than her rent. Even with the higher DTI, those compensating factors got her a conventional loan.
A lot of people who borrow money think that regular loans are always better, but that's not the case. Let me explain when government options might be better for you.
The Department of Housing and Urban Development runs the Federal Housing Administration program, which protects loans made by private lenders. This insurance protects lenders if borrowers don't pay back their loans, which lets them take on more risk.
FHA loans are great when:
Most FHA loans come with mortgage insurance for the life of the loan, which raises your monthly payments. If you take out a $300,000 FHA loan with a 3.5% down payment, you'll pay about $175 to $200 a month in mortgage insurance premiums.
The Department of Veterans Affairs backs loans for active-duty service members, veterans, and spouses who meet certain requirements. These loans don't require a down payment or monthly mortgage insurance, which is a huge financial benefit.
You can add the VA funding fee (currently 2.15% for first-time use with 0% down, according to VA loan guidelines) to the loan amount. Some borrowers with service-connected disabilities don't have to pay this fee at all.
The U.S. Department of Agriculture backs loans for homes in certain rural and suburban areas. It's not just farmland that qualifies; you'd be surprised how many places do. Many of the outer suburbs of big cities are in USDA areas.
The main restriction is the income limit. In Texas, for instance, a family of one to four people must have a household income of less than $103,500.
We can help you figure out which loan program has the best terms for your situation at AmeriSave. We work with all of these types of loans.
Here's a plan to help you get ready to apply if you're not quite ready yet.
These steps will help your credit in 3 to 6 months, but it will take time.
Actions that need to be taken right away (effects will be seen within 30 days):
The Consumer Financial Protection Bureau says that payment history makes up 35% of your FICO credit score, while amounts owed make up 30%. For the best results, put all of your energy into these two areas.
You can either lower your debt, raise your income, or do both.
For example, if your DTI is 49% and the lender's limit is 45%, you can't borrow more than that. You need to cut your monthly debt payments by about $300. Choices:
This is where I see buyers get creative, and family members often step in to help.
Gift funds need certain paperwork. The person giving the gift must write and sign a letter saying that the money is a gift, not a loan. You will need to keep a record of the money moving from the donor's account to yours. FHA loans let you use gifts for the whole down payment, but conventional loans usually require at least 5% of your own money if you're putting down less than 20%.
Every state has programs that help first-time buyers with their down payments by giving them grants or loans with no interest. For instance, the Texas State Affordable Housing Corporation offers programs that help with up to 5% of the down payment. A lot of programs have income limits and require people to take classes on how to buy a home.
Before you start looking for a house, get preapproved, not just prequalified. There is a big difference.
Prequalification is an informal guess based on what people say about themselves. It takes 10 minutes and doesn't mean much to sellers.
To get preapproved, you have to fill out a full application, send in documents, and have an underwriter look over your finances. Our preapproval process at AmeriSave usually takes 24 to 48 hours. After that, you'll get a commitment letter that tells you how much you can borrow and what the interest rate will be.
Having these ready makes things go a lot faster. I've seen applications that should take two days take two weeks because the people who needed the money couldn't find their tax returns.
The Federal Housing Finance Agency sets yearly limits on how many loans Fannie Mae and Freddie Mac can buy. According to FHFA's November 2024 announcement, the conforming loan limit for single-family homes in most areas is $806,500.
In the most expensive markets, the limits can go up to $1,209,750. If you want to buy something that costs more than these limits, you'll need a jumbo loan with stricter rules. For example, you need a higher credit score (usually 700 or higher), a bigger down payment (at least 15% to 20%), and more cash on hand.
The limits on FHA loans also went up. The standard limit is $524,225 in most places, but in high-cost areas, it can go up to $1,209,750. These limits are different in each county, so make sure to find out what the limit is for the place you want to go.
If you put down less than 20% on a conventional loan, you'll have to pay PMI until you have 20% equity. The cost is between 0.5% and 1.5% of the original loan amount each year, paid in 12 monthly installments.
For a $300,000 loan with a 5% down payment and a 660 credit score, you should expect to pay about $125 to $175 a month for PMI. That's $1,500 to $2,100 every year until you have 20% equity.
The good news? You can ask for PMI to be canceled once you reach 20% equity through principal payments or the value of your home going up. Lenders have to automatically take it away when the equity reaches 22%.
FHA mortgage insurance is different. You pay a premium of 1.75% of the loan amount up front and then again every year. For most FHA loans with less than 10% down, the annual premium stays the same for the life of the loan. The only way to get rid of it is to refinance to a conventional loan when you have 20% equity.
I see the same mistakes over and over again after working in this field for years. Let me help you avoid these problems.
Opening new credit accounts: That department store card that lets you save 10% seems harmless, but lenders check your credit again before closing. New accounts can lower your score and make you owe more money.
Buying big things: Buyers who finance furniture, cars, or other big-ticket items before closing often see their DTI go above the limits for getting approved. I've had deals fall through just days before closing because borrowers used credit to buy $40,000 worth of furniture.
Lenders need to check your job right before you close on a new one. Changing jobs, even for more money, can cause problems with paperwork and delay or even kill your approval. After closing, wait.
Moving money between accounts: Big transfers make people suspicious. Lenders need to know where all the money comes from, and moving it around makes it hard to keep track of. Do it well before you apply if you have to combine accounts.
Depositing a lot of cash: If you deposit more than a certain amount (which varies by lender, but is usually between $500 and $1,000), you need to show where the money came from. You can't always find out where cash deposits came from, and they don't count toward reserves or a down payment.
Adding another person to your application may help you qualify, but you should know the difference:
Co-borrowers, who are usually spouses or partners buying a home together, both live in the home, are both on the title, and are both equally responsible for making payments. Lenders look at both incomes and both credit histories.
Co-signers don't live in the property, but they agree to be responsible if you don't pay. A lot of loan programs don't let co-signers help you buy your main home. Some people do look at the co-signer's DTI even if they don't live there, which can make it hard to qualify.
Knowing how long the mortgage application process will take can help you deal with stress and set realistic expectations.
You'll sign the final paperwork, pay your down payment and closing costs, and get your keys.
This timeline doesn't take any problems into account. Problems with the appraisal, missing paperwork, or bad credit can make the process take 45 to 60 days longer.
There are special chances in the current market. Borrowers can buy more now that mortgage rates are at 6.19%, down from over 7% earlier this year. According to Fed policy announcements, the federal funds rate went down to 4.0%–4.25% in September 2025 when the Federal Reserve cut rates by 25 basis points, and down to 3.5%-3.75% after two more cuts in October and December.
In real life, this means that a borrower who could get a $350,000 loan at 7% interest can now get about $375,000 at 6.2% while keeping the same monthly payment. The drop in rates alone gives you $25,000 more to spend.
According to the National Association of REALTORS®, the median price of an existing home was $435,300 in June 2025. Prices are still high, but lower rates and a slowly growing inventory are making it easier for qualified buyers to buy homes than it was in 2023-2024.
In 2026, getting a mortgage will be easier than most people think, even though you will need to meet a lot of requirements. You don't need to have perfect credit, a huge down payment, or no debt at all. You need to show that you are a responsible borrower who can make the monthly payment.
Make sure your credit score is at least 620 (580 for FHA), your DTI ratio is below 45%, you have enough money saved for a down payment (3–5% works for many programs), and you can prove that your income has been stable for at least two years. Everything else is about working with your lender to show off your strengths and make up for your weaknesses.
The mortgage market is very competitive, so getting preapproved before you start looking for a house is a big plus. AmeriSave's simple digital process makes it easy to get started, and we work with borrowers with all kinds of credit to help them find the best loan program for their needs.
The minimum credit score you need depends on the type of loan you want. Most conventional loans need a score of 620 or higher, but some lenders will accept scores as low as 600 if the borrower has strong compensating factors like a large down payment or a lot of savings. You can get an FHA loan with a credit score as low as 580 if you put down 3.5% of the total amount, or 500–579 if you put down 10%. There is no minimum amount that the government requires for VA loans, but most lenders want 620. Most USDA loans require a score of at least 580. Not only does your credit score affect whether or not you get approved, but it also affects your interest rate. Higher scores get much better rates, which could save you tens of thousands of dollars over the life of the loan.
Yes, but it's harder. The Consumer Financial Protection Bureau got rid of the strict 43% DTI cap for qualified mortgages in 2020. Instead, they put in place more flexible pricing-based limits. Most of the time, conventional loans will accept DTI ratios of up to 45%, and sometimes even 50% if you have good credit and a lot of savings. FHA loans can be as high as 50% for people with credit scores of 580 or higher. In rare cases, they can be as high as 57% if there are strong reasons to do so. What matters most is showing that you can handle the mortgage even though your debt payments are higher. You need to show that you have a steady income, cash reserves, and a good credit history. Not just one ratio, but all of your financial information is looked at by lenders.
The amount you need to put down on a loan depends a lot on the type of loan and your qualifications. First-time home buyers can put down as little as 3% on a conventional loan, but repeat buyers usually put down 5%. If your credit score is 580 or higher, you need to put down 3.5% for an FHA loan. If your score is between 500 and 579, you need to put down 10%. VA loans for qualified service members and veterans don't require any money down, and neither do USDA loans for homes in qualified rural and suburban areas. Putting down 20% is still the best option because it means you don't have to pay mortgage insurance on a conventional loan, but most buyers today put down less than 20%. The most important thing is to have enough money for the loan program you want and some extra money to cover closing costs and other unexpected costs.
If you have little other debt, you would need to make about $70,000 to $80,000 a year to qualify for a $300,000 mortgage using standard qualification metrics. If you take out a $300,000 loan with a 6.2% interest rate and put down 5%, your monthly payment for principal and interest will be about $1,750. Add $350 to $500 for property taxes and insurance, which brings the total housing payment to about $2,100 to $2,250. Most lenders want your total debt-to-income ratio to be less than 45%. This means that all of your debt payments should be less than 45% of your gross monthly income. If you have a $2,250 mortgage and $500 in other debts, you would need to make about $6,100 a month, or $73,200 a year. But if you don't have any other debts, you might be able to qualify with less money. On the other hand, if you have a lot of credit card debt, student loans, or car payments, you would need more money to qualify.
The whole process of getting a mortgage approved usually takes 30 to 45 days, from the time you apply to the time you close. However, this timeline can change depending on how complicated things are and if any problems come up. Once you send in a full application with all the necessary documents, you can get preapproval in 24 to 48 hours. During the processing and underwriting phase, which usually lasts 7 to 14 days, the lender checks your information, orders the appraisal, and looks over your financial profile. You usually get conditional approval within 10 to 15 days. After that, you have time to meet any conditions the underwriter set. Most people who borrow money get to "clear to close" status in 21 to 30 days. Getting ready for closing and making an appointment for closing are the last things you do. Slow appraisals, missing paperwork, or last-minute credit problems are all common reasons for delays. You can speed up the process by getting all your paperwork in order ahead of time, responding right away to lender requests, and not making any changes to your finances while your application is being processed.
There are a number of things that could keep you from getting a mortgage. If you recently filed for bankruptcy or lost your home, you are automatically disqualified. Conventional loans usually require four years after bankruptcy or seven years after foreclosure, while FHA loans allow two years after bankruptcy and three years after foreclosure. Recent collections, charge-offs, or late payments that are related to your mortgage can make you ineligible, especially if they are big. Not having enough money to meet DTI requirements is a common reason for disqualification, as is having an unstable work history with frequent job changes or gaps in employment. If you find undisclosed debt during verification, you will usually be denied. Problems with the appraisal that show the property's value is much lower than the purchase price can kill the deal, as can problems with the property's condition that don't meet FHA or VA loan minimum standards. If you lie or commit fraud on your application, it will be denied right away and you could face legal action. Recent large deposits that can't be explained, not being able to find the money for a down payment, or proof of recent credit checks for other big purchases can also stop approval.
Yes, self-employed borrowers can definitely qualify, but they will need to provide more paperwork. Most lenders want to see two years' worth of personal and business tax returns, including all schedules. They'll take your net income from the last two years and add back some non-cash deductions, such as depreciation, depletion, and business use of home expenses. You may need to send in year-to-date profit and loss statements and a letter from a CPA confirming your income. Many self-employed borrowers have a hard time because aggressive tax deductions that lower their tax bill also lower their qualifying income. A business owner who writes off a lot of costs might report $60,000 in net income on their tax returns, even though they really made $100,000. Lenders can only use the $60,000 that has been documented. Bank statement loan programs are another option. Instead of tax returns, lenders look at 12 to 24 months of business bank deposits. However, these loans usually have higher interest rates. Planning ahead by lowering your deductions for one to two years before applying can greatly increase your chances of qualifying.
No way. Having perfect credit can help you get the best interest rates, but you can still get approved with less than perfect credit. Lenders know that things happen in life that can hurt your credit score, like losing your job, getting sick, or getting divorced. Your overall credit history and recent history are the most important things. A borrower with a 640 credit score, no recent late payments, and good reasons for past problems is often approved over someone with a 720 score but recent bad marks. FHA loans are made for people who have trouble with their credit. They will accept scores as low as 580, and even 500 with a bigger down payment. Many lenders look at non-traditional credit histories for borrowers who don't have traditional credit scores. They do this by looking at things like rent payments, utility bills, and other payment records. The most important thing is to show that you are responsible with your money right now, no matter what problems you may have had in the past. Recent good payment history is a big factor in whether or not to approve a loan. If your credit isn't perfect, work on things that will help you, like saving up a bigger down payment, building up cash reserves, keeping your job stable, and keeping your DTI low.
The type of property you want to buy has a big effect on how hard it is to get a loan and what the terms are. The best treatment is for primary residences, which are homes you will live in as your main home. They have the lowest down payment requirements, the best interest rates, and access to all government-backed programs. Lenders see primary residences as the least risky because homeowners make their mortgage payments on time. Second homes or vacation homes need higher credit scores (usually at least 660–680), bigger down payments (10–15%), and stricter DTI rules. Investment properties have the highest requirements: you should expect to need 15–25% down, a credit score of at least 680, and a DTI ratio of less than 40%. Most lenders want you to have 6 to 12 months' worth of mortgage payments set aside for investment properties. Also, the condition of the property is important. FHA and VA loans require that properties meet minimum safety, security, and soundness standards. FHA or VA must approve the projects that condos are in. You can get a loan for a multi-unit property (duplex, triplex, or fourplex), but you need to provide more paperwork and make a bigger down payment than you would for a single-family home.
Prequalification is an informal estimate that a lender makes based on the financial information you give them. It usually takes 10 to 15 minutes, doesn't need any paperwork, and doesn't check your credit. Prequalification gives you a rough idea of how much you might be able to borrow, but sellers don't pay much attention to it because it hasn't been verified. To get preapproval, you have to fill out a full mortgage application, show proof of your income, assets, and debts, and give permission for a hard credit pull. An underwriter looks at all of your financial information and sends you a commitment letter that tells you how much you can borrow, what the estimated rate is, and what the loan program is. It usually takes 24 to 48 hours to get preapproved, and it lasts for 60 to 90 days. It tells sellers that you're a serious buyer who has been checked out by a lender and can really close the deal. In competitive markets, a lot of sellers won't look at offers that don't come with preapproval letters. The difference can make or break your offer, especially if you're up against more than one buyer.
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