The minimum credit score, down payment, and debt levels you need to qualify for each type of mortgage

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  • Government-backed mortgages typically have more lenient requirements than conventional mortgages.
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When you apply for a mortgage, you have to meet basic eligibility requirements for a lender to approve your application. There are several types of mortgages, and each one has its own rules about who gets the green light.

To determine your eligibility, lenders look at three main factors: your credit score, debt-to-income ratio, and down payment. There may be other factors to consider, too, depending on the kind of mortgage.

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We’re providing the general rules of thumb for mortgage requirements, but in some cases, the eligibility is up to the lender. Standards for down payments are pretty universal across the board, but a lender may decide it requires a 640 credit score for a conforming loan instead of the usual 620, for example. Or it may approve you with a lower credit score if you have a high down payment.

When shopping for lenders, ask a representative about its minimum requirements if you’re unsure.

Conventional mortgages

A conventional mortgage simply means one that isn’t backed by the US government. It’s typically a little harder to get a conventional mortgage than a government-backed mortgage (which we’ll cover later).

There are two types of conventional mortgages: a conforming loan and nonconforming loan.

How to qualify for a conforming loan

A conforming loan meets the borrowing limits set by the Federal Housing Finance Agency (FHFA). Here are the requirements:

  • Credit score: 620
  • Debt-to-income ratio: 36% to 50%, depending on the lender and how strong other parts of your financial profile are
  • Down payment: You may need up to 10%, but if your mortgage is backed by government-sponsored mortgage companies Freddie Mac or Fannie Mae, you’ll only need 3%
  • Other requirements: In 2021, the borrowing limit for a conforming loan is $548,250 in most parts of the US. In areas with a higher cost of living, such as Alaska, Hawaii, Guam, and the US Virgin Islands, the limit has been bumped up to $822,375.

How to qualify for a nonconforming loan

If you need to borrow more than the FHFA limit, you’ll have to apply for a nonconforming loan, sometimes referred to as a jumbo loan. Requirements tend to be stricter than with conforming loans, and the minimum standards are heavily determined by the lender. Here’s roughly what you can expect, though:

  • Credit score: 700
  • Debt-to-income ratio: It’s up to the lender, but probably between 36% and 45%
  • Down payment: Many require at least 20%, but some ask for less or more
  • Other requirements: A nonconforming loan is for people who need to borrow more than $548,250 in most parts of the US, or $822,375 in more expensive areas. The amount you can borrow will depend on how strong your financial profile is.

Government-backed mortgages

A government mortgage is backed by a federal agency. If you fail to make your mortgage payments, the agency will compensate the lender. This makes government-backed mortgages a little easier to qualify for, because they’re less risky for lenders.

There are three main types of government mortgages: FHA, VA, and USDA loans.

How to qualify for an FHA loan

A loan from the Federal Housing Administration is for buyers who don’t have the best credit scores or debt-to-income ratios, but still want to buy a home. Here’s what you’ll need for an FHA loan:

  • Credit score: 580
  • Debt-to-income ratio: 43%
  • Down payment: 3.5%; or if your score is between 500 and 579, you can qualify with a 10% down payment
  • Other requirements: The FHA restricts how much you can borrow, and your limit depends on where you live in the US and whether you’re buying a single- or multi-family place. Your home must meet certain property standards. You can use an FHA loan to buy a home with normal wear and tear, but not one with major structural or safety issues.

How to qualify for a VA loan

A Veterans Affairs loan is for military families. Here are the requirements:

  • Credit score: 660
  • Debt-to-income ratio: 41%
  • Down payment: No down payment is necessary
  • Other requirements: You must be an active-duty military member or a veteran who served for a certain amount of time. You’ll also qualify if you’re a spouse of someone who died in active duty or another military-related incident, or if your spouse is a prisoner of war or MIA. The home you’re buying should meet safety standards and be used as your primary residence, but there are no strict borrowing limits set by the VA.

How to qualify for a USDA loan

A loan from the United States Department of Agriculture is for low-to-moderate income borrowers buying homes in rural or suburban areas. You’ll need the following to be eligible:

  • Credit score: 640
  • Debt-to-income ratio: 41%
  • Down payment: No down payment is necessary
  • Other requirements: Your home must be in a rural or suburban part of the US. If you already know the address of the home you want to buy, enter the information into the USDA Property Eligibility Site to see if it qualifies for a USDA loan. You also must earn a low-to-moderate income, and the limit varies based on where you live. Your monthly mortgage payments should not exceed 29% of your monthly income. This number includes your loan principal, interest, insurance, taxes, and homeowner’s association dues.

Knowing which mortgage types you qualify for can help you determine which one is the best fit. There may be some flexibility, though. For instance, a lender may approve you with a high DTI ratio if you have an excellent credit score and sizeable down payment. If you’re set on a certain type of mortgage but don’t think you qualify, call a lender to ask about your options.

Mortgage and refinance rates by state

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Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.

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