Mortgage Eligibility: What Lenders Look For
Lenders run the same short list on almost every purchase: credit, cash for the down payment and closing, income against the new payment and your other debts, recent bankruptcy or foreclosure, and whether the house itself is financeable.
The cutoffs are not one national rule. FHA, VA, USDA, and conventional loans each set their own. Meeting the tighter end of the list is how you get the smoother approval. Falling short on one line usually changes the program or the price. It does not, by itself, end the file.
The screens lenders actually use
| What they review | How to read it |
|---|---|
| Credit score | Conventional files often start around 620. FHA can go to 580 with 3.5% down, and lower scores sometimes still close with 10% down. A higher score is what improves the rate. |
| Down payment | FHA is commonly 3.5%. Conventional is often 3% to 5%. VA and USDA can be $0 down when you and the property qualify. There is no single minimum. |
| Income and debts | The housing payment and your other monthly debts are compared with gross income. A rough screen is a housing payment under about a third of gross income. Program caps differ. Use the debt-to-income calculator for the lender ceiling, and the budget planner for a payment you can keep. |
| Bankruptcy or foreclosure | Waiting periods are often two to four years, and they depend on the loan and whether the bankruptcy was discharged. A recent event is a timing problem, not a permanent one. |
| The property | Smaller loan amounts, often under about $150,000, can be harder to place. Manufactured homes need owned land rather than a leased lot, a permanent foundation, code compliance, and utilities. |
| Timing | A pre-approval is built for a purchase in the near term. Letters often expire in about 60 days, and the rate can move after that. |
Those rows are the shared checklist. The number that decides your file is on the program page: FHA, VA, USDA, or a conventional loan through the mortgage overview.
Guidelines are not pass or fail
A lender’s job is to match the file to a program. Low credit with a large down payment, or high debt with strong reserves, can still close. The cost and the timeline change. The debt-to-income guide and the down payment guide are the two places those tradeoffs show up first.
Pre-qualification and pre-approval
Pre-qualification uses the income, debts, and credit score you report. It is a range, not a commitment. Pre-approval is after the lender verifies income, credit, and assets. That letter is what a seller, and a HUD bid, will ask for.
Reporting your numbers does not pull a credit report. The pull happens when you apply and the lender checks the file. If you want a person to run the programs against your situation, start at find a lender.
Key takeaways
- Credit, down payment, income versus debts, recent bankruptcy, and the property are the shared screens
- FHA, VA, USDA, and conventional loans do not share one cutoff
- Missing a preferred number usually changes the program or the price
- A first conversation on self-reported numbers is not a credit check
- Pre-approval is the verified letter, and it expires