How Do You Qualify for a Mortgage?

Understand Credit, Income, and Other Requirements

To qualify for a mortgage, you need to demonstrate that you can make your payments on time, each month, throughout the life of the loan.

Lenders like Freedom Mortgage look at your credit score, income, debts, and finances when deciding to approve your mortgage. What do you need to do to qualify? Check out these steps:

1. Buy an Affordable Home

You need to buy a home with an affordable payment to qualify for a mortgage. Your monthly payment includes the costs of principal, interest, property taxes, homeowners insurance, and mortgage insurance if your loan requires it.

Use our mortgage payment calculator to estimate home prices you can afford and how much you might pay each month.

2. Have a Qualifying, Minimum Credit Score

Most mortgages have a minimum credit score for buying and refinancing a home. At Freedom Mortgage, we can often approve you for a Conventional loan with a minimum credit score of 620. For VA and FHA loans, our minimum credit scores are often 550.

Keep in mind that having a credit score higher than the minimum can improve the chances of getting your mortgage application approved and might help you get a better rate or terms, too.

3. Demonstrate Steady Employment and Income

Having a steady income from a stable job is an important part of qualifying for a mortgage. Lenders will want to see that you have a stable income that is sufficient to pay your mortgage bill each month and that your income is likely to continue. This is the reason that it can be harder to qualify for a mortgage if you have recently changed jobs.

Self-employed people can qualify for a mortgage, but you may need to provide more documentation or meet more stringent requirements to show your income is stable and likely to continue. Learn about getting a mortgage when you are self-employed.

4. Have an Acceptable Amount of Debt

Mortgage lenders want to know more than whether you can afford to make your mortgage payments. They want to know whether you can afford all your monthly debt payments—like student loans, car loans, or credit card debt— in addition to your mortgage payment.

As a result, we'll ask for information about all the debts you may have and use them to calculate a debt-to-income ratio. This ratio helps us decide whether or not you qualify for a mortgage.

5. Show Proof of Assets

Mortgage lenders also typically want to know about your assets, like bank accounts, retirement accounts, investments in stocks and bonds, and personal property. This helps us better understand your finances and gives us assurance that you have assets you could tap into to help pay your mortgage if your monthly income changes.

6. Finance an Eligible Property Type

You can buy and refinance many types of homes with a Conventional loan, including primary homes, second homes, rental homes, and investment properties. FHA and VA loans are different. With these loans, you are generally limited to buying or refinancing only your primary home—that is, the home where you live most of the time.

7. Make a Qualifying, Minimum Down Payment

When you are buying a house with a Conventional or FHA loan, you'll need to make a minimum down payment. This minimum down payment is often 5% of the purchase price for a Conventional loan and 3.5% of the purchase price for an FHA loan.

It's often possible to buy a house without a down payment when you qualify for a VA or USDA loan. Note that making a larger down payment might improve your chances of getting approved and can save you money on interest over the life of the loan.

8. Have the Cash You Need to Close

Many times, you need to pay some of your closing costs in cash when you buy or refinance a home. We'll let you know how much you may need to pay before your closing date.