What Exactly Do I Need to Qualify for a Home Loan?

Year after year, home buyers continue to make the same mistake…

They wait until they find their dream home to start the process of qualifying for a home loan.

Getting pre-approved for a home loan should actually be the very first step in your house hunt!


  • Confirms that you will qualify for a home loan when you find your dream home.
  • Tells you how much money you can qualify for so you’ll know exactly what your budget is.
  • Strengthens any offer you make on a home by assuring the sellers that obtaining financing to close the deal won’t be a problem.

Are you wondering what it takes to qualify for a home loan? Here are the three things you’ll need:

1. Good Credit

Your credit history is exceptionally important when applying for a home loan.

First, you need reasonably good credit to qualify for a home loan period. Generally, you want to have at least a 620 credit score.    

But don’t just settle for good. The better your credit score is, the lower your interest rate will be. And the lower your interest rate is, the lower your monthly payment (and overall repayment of the loan) will be!

You should also know that it’s possible to buy a home with credit as low as 500 using an FHA loan. Ask your real estate agent or lender for more information about qualifying for an FHA loan.  

2. Proof of Income

Lenders need reassurance that you make enough money to be able to make your mortgage payments (including property taxes and homeowner’s insurance) every month. So they’re going to want to see proof of your income.

Your lender may ask to see pay stubs, bank statements, tax returns, or any combination of those to confirm your income.   

3. Healthy Financial Ratios

Your lender will also want to know about your existing debts. How much do you owe in student loans? Are you making payments on your car?

Knowing how much debt you’re currently in helps your lender determine whether it’s financially responsible for them to increase your debt with a home loan.

The Debt-to-Income Ratio is one of the most common financial ratios lenders check. It tells lenders what percent of your income is allocated toward paying off your debt.

As a general rule-of-thumb, your total housing cost (mortgage, property taxes, homeowners insurance and any HOA dues or mortgage insurance) should be less than 31 percent of your pre-tax income. And your total housing plus all other debt payments should be less than 43 percent of your pre-tax income.  

If you’re uncertain about your ability to qualify for a loan, or you’re just wondering how much you’re qualified to borrow, ask a lender. They can review your credit and financial documents to pre-approve you for a home loan in no time.  

The home loan process may not be the easiest thing in the world to navigate, but there are professionals to help you every step of the way. So contact a lender today to make sure you qualify for a home loan, and you’ll be well on your way to buying your dream home.  

This post is intended for informational purposes only and should not be taken as professional advice. The point of view and opinions expressed in this post are those of the author and do not necessarily reflect the position of Realty Executives International. This post was written by Michelle Clardie. Michelle is a professional real estate blogger, specializing in ghostwriting Realtor® blogs. Her engaging content helps real estate agents become more visible online, generate more qualified leads, and increase their revenues. You can learn more at www.michelleclardie.com

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