Buying a house can feel like a mystery with no answer key.
The requirements to buy a house come down to six things you can check yourself: credit, income, debt-to-income ratio, down payment savings, employment history, and paperwork. Get a handle on those and you'll walk into a lender's office with real confidence.
The exact numbers shift by loan type. A conventional loan, an FHA loan, a VA loan, and a USDA loan each set their own bar. We'll compare all four later in this post.
1. A Qualifying Credit Score
Your credit score is often the first number a lender checks. It shows how you've handled debt, and it affects your interest rate.
Minimums vary by loan type:
- Conventional loan: usually 620
- FHA loan: 580 with a 3.5% down payment, or 500 with 10% down
- VA loan: no official government minimum, but most lenders want to see 580 to 620
- USDA loan: typically 640
A higher score gets you a lower rate and often lower mortgage insurance costs. The gap between a 620 and a 740 score can add up to thousands of dollars over a loan's life.
A thin credit file won't automatically rule you out. Some lenders use manual underwriting and look at rent and utility payments as proof you pay on time. FHA loans work well for buyers with limited credit.
Pull your credit report for free at AnnualCreditReport.com before you do anything else. A wrong late payment can drag your score down for no reason, and it's an easy fix once you spot it.
2. Stable Income and Employment History
Lenders want proof your paycheck keeps showing up after closing day. The standard rule is two years of steady employment or income in the same field.
That doesn't mean the same job title for two straight years. A move to a similar role or better-paying job in the same industry is usually fine. A recent grad or someone who switched careers can still qualify if the new role fits a clear career path.
How Self-Employed Buyers Qualify Differently
Self-employed buyers face a different process. Instead of pay stubs, lenders ask for two years of tax returns and average that income into a monthly number. A dip in year two can hurt approval odds even if current income looks strong, since lenders want income that's stable or growing. Keep clean books and talk to a lender early if your business had an unusual year.
3. Debt-to-Income (DTI) Ratio
Your debt-to-income ratio, or DTI, compares your monthly debt payments to your income. Front-end DTI covers only your future housing payment. Back-end DTI adds in other debts, like car loans and credit cards. Most programs cap back-end DTI between 43% and 50%.
To calculate it, add up your monthly debts, including the new mortgage payment, then divide by your gross monthly income and multiply by 100. Debts of $1,800 against income of $5,000 gives a DTI of 36%, a solid number for most programs.
If your DTI is too high, paying down credit cards often helps faster than raising your credit score.
4. Savings for a Down Payment and Closing Costs
Down payment minimums also depend on loan type:
- Conventional loan: as low as 3% for qualified first-time buyers
- FHA loan: 3.5%
- VA loan: 0% for eligible veterans and service members
- USDA loan: 0% in eligible rural areas
- 20% down: not required, but it lets you skip private mortgage insurance (PMI)
The idea that you need 20% down is one of the most common myths in real estate. Most first-time buyers put down far less. Under 20% usually means paying PMI, an added monthly cost that protects the lender until you build equity.
Don't forget closing costs, which run 2% to 5% of the purchase price and cover appraisal fees, title insurance, and lender fees. On a $300,000 home, that's $6,000 to $15,000 on top of your down payment.
Down payment money can come from savings, a retirement withdrawal, or a gift from family. Gift funds need a signed gift letter stating the money doesn't need to be repaid. Lenders also look for seasoning, meaning the money should sit in your account a while before closing, since a large unexplained deposit raises a red flag.
Down Payment Assistance Programs
If saving a full down payment feels out of reach, down payment assistance programs can help. Many states and cities offer grants or forgivable loans for first-time buyers. Search your state housing finance agency's website or ask a local lender what applies where you live.
If you're still early in the process, our guide on planning to buy a house walks through building a savings timeline that fits your goals.
5. Required Documentation
Lenders ask for a lot of paperwork to prove who you are and that you can afford the loan. The typical documents needed to buy a house:
- Recent pay stubs, usually the last 30 days
- W-2s or 1099s from the past two years
- Federal tax returns from the past two years
- Bank statements from the past two to three months
- A government-issued photo ID
- Gift letters, if part of your down payment is a gift
- Additional profit-and-loss statements and business tax returns for self-employed buyers
Common delays happen when buyers submit incomplete statements or skip explaining a large deposit. Gather everything early and keep it in one folder.
6. Mortgage Preapproval
Prequalification and mortgage preapproval sound similar, but they aren't the same thing.
Prequalification is a quick estimate based on numbers you report yourself, with no verification.
Preapproval goes further. A lender verifies your income, credit, assets, and debt, then issues a mortgage preapproval letter stating how much you're approved to borrow. Sellers expect this letter in a competitive market. Most letters are valid for 60 to 90 days.
7. Other Practical Requirements
A few practical steps round out the process.
A licensed real estate agent helps handle offers and negotiations. See whether you need a real estate agent to buy a house and how to find a real estate agent for more.
A home inspection usually happens within one to two weeks after your offer is accepted. A home appraisal, ordered by your lender, confirms the home is worth what you're paying, and homeowners insurance is required before closing too.
Requirements That Change by Loan Type
Here's a side-by-side look at how the four major loan types compare.
| Requirement | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Min. credit score | 620 | 580 (500 w/ 10% down) | No set minimum (580 to 620 typical) | ~640 |
| Min. down payment | 3% | 3.5% | 0% | 0% |
| Typical DTI cap | 45 to 50% | 43 to 50% | 41% | 41% |
| Mortgage insurance | PMI under 20% down | Upfront + annual premium | Funding fee, no monthly premium | Upfront + annual guarantee fee |
| Occupancy rule | Primary or second home | Primary only | Primary only | Primary only |
FHA loans, detailed on HUD.gov, suit buyers with lower credit or smaller savings. VA loans, explained on VA.gov, serve eligible veterans and service members. USDA loans, covered on the USDA Rural Development site, apply only in designated rural areas and carry income limits.
Non-citizen buyers can qualify too. Many lenders accept an ITIN instead of a Social Security number, though options can be limited.
What If You Don't Meet the Requirements Yet?
Not qualifying today doesn't mean you won't qualify soon. Here's a practical roadmap.
In the next 90 days, pull your credit report, dispute any errors, and pay down credit card balances. Small drops in utilization can raise your score within a billing cycle or two.
Over the next 6 months, open a dedicated savings account and automate a transfer every payday. Keep debt payments current and avoid new credit accounts.
Over the next year, if your DTI is still too high, pay off one loan or card completely rather than spreading payments across several.
A free resource many buyers skip is a HUD-approved housing counselor, found through HUD's housing counseling directory. Counselors review your finances and build a plan at no cost.
I remember sitting down with my own numbers years ago, convinced I was nowhere close to buying. My DTI was too high because of a car loan I'd forgotten to factor in. Six months of extra payments later, that loan was gone, and my next preapproval came back with a number I believed.
The Consumer Financial Protection Bureau also has free budgeting and mortgage shopping tools.
Frequently Asked Questions
What is the minimum credit score needed to buy a house?
It depends on the loan. Conventional loans usually need 620, FHA loans accept scores as low as 500 with 10% down, and USDA loans want around 640. VA loans have no official minimum.
How much money do you need to buy a house?
You need a down payment from 0% to 20%, plus closing costs of 2% to 5% of the price. On a $300,000 home, that's a few thousand dollars to $60,000 or more.
What is considered a good debt-to-income ratio to buy a house?
A DTI under 36% is strong. Many programs approve buyers up to 43% or 50% with good credit or savings.
Can I buy a house with no down payment?
Yes, with an eligible VA loan or USDA loan, both allowing 0% down. Conventional and FHA loans require as little as 3% to 3.5%.
Can I buy a house with bad credit or no credit history?
It's possible with an FHA loan, which accepts scores as low as 500. With no credit file, some lenders review rent and utility payment history instead.
How many years of employment history do you need to buy a house?
Most lenders want two years of steady employment or income in the same field. A recent job change in the same industry usually still qualifies.
What documents do I need to buy a house?
You typically need pay stubs, W-2s or 1099s, two years of tax returns, bank statements, a photo ID, and a gift letter if part of your down payment is a gift.
Is mortgage preapproval the same as prequalification?
No. Prequalification is a quick, unverified estimate. Preapproval means a lender checked your income, credit, and assets and gave you a letter sellers take seriously.
What credit score do you need for an FHA loan vs a conventional loan?
FHA loans accept scores as low as 500 with 10% down, or 580 with 3.5% down. Conventional loans usually need at least 620.
Can self-employed people qualify for a mortgage?
Yes. Self-employed buyers qualify using two years of tax returns instead of pay stubs, averaged into a monthly income figure.
Ready to Find Out Where You Stand?
Reading a checklist is one thing. Seeing your actual numbers is another. Connect with a local agent and lender partner for a personalized readiness check that reviews your credit, income, and savings together, and turns "someday" into a real moving date.
