How to Get Approved for a Mortgage in 2026: The Complete 7-Step Checklist
✅ Get Approved for a Mortgage in 7 Steps
Getting approved for a mortgage in 2026 requires meeting 7 key criteria: credit score (620+), debt-to-income ratio (under 43%), stable income (2 years), down payment (3.5-20%), job history, assets, and clean financial record. This guide shows you exactly what lenders check and how to qualify—even with bad credit or student loans.
Quick Answer: What Do You Need to Get Approved?
✅ 7 Requirements to Get Approved:
1. Credit Score
620+ conventional, 580+ FHA
2. Debt-to-Income Ratio
Under 43-50% (lower is better)
3. Stable Income
2 years same job/industry
4. Down Payment
3.5-20% of home price
5. Employment History
2+ years verifiable work
6. Cash Reserves
2-6 months mortgage payments
7. Clean Record
No bankruptcies (2-4 years)
Step 1: Check Your Credit Score (620+ Required)
🎯 Target Credit Score by Loan Type:
• FHA Loan: 580+ (500+ with 10% down)
• Conventional Loan: 620+ (640+ for best rates)
• VA Loan: 640+ (no official minimum, but lenders prefer 640+)
• USDA Loan: 640+
• Jumbo Loan: 700+
How Credit Score Affects Your Rate:
| Credit Score | Interest Rate | Monthly Payment ($400K) |
|---|---|---|
| 760-850 | 6.25% | $2,462/month |
| 700-759 | 6.47% | $2,516/month |
| 680-699 | 6.64% | $2,559/month |
| 660-679 | 6.86% | $2,616/month |
| 640-659 | 7.09% | $2,676/month |
| 620-639 | 7.33% | $2,738/month |
Difference: 760 score vs 620 score = $276/month = $99,360 over 30 years!
💡 How to Improve Your Credit Score Fast:
- • Pay down credit cards to under 30% utilization (biggest impact, +20-50 points in 30 days)
- • Dispute credit report errors (free at AnnualCreditReport.com)
- • Become an authorized user on a family member's old card with perfect history
- • Pay all bills on time for 6 months (payment history = 35% of score)
- • Don't close old credit cards (hurts credit age and utilization)
Step 2: Calculate Your Debt-to-Income Ratio (Under 43%)
📊 What Is DTI?
Debt-to-Income Ratio (DTI) = Your total monthly debt payments ÷ Your gross monthly income
Lenders want DTI under 43% for conventional loans, 50% for FHA loans.
DTI Calculation Example:
Scenario: $70,000 income, buying $350K house
Gross monthly income: $5,833
Monthly debts:
- • Future mortgage payment: $2,200 (estimated)
- • Student loan: $300
- • Car payment: $400
- • Credit card minimums: $100
- • Total monthly debt: $3,000
DTI calculation: $3,000 ÷ $5,833 = 51.4% DTI
❌ DENIED (over 43% limit for conventional)
✅ How to Fix High DTI:
- • Pay off car loan ($400/month saved) → DTI drops to 44.6%
- • Pay off credit cards ($100/month saved) → DTI drops to 42.9% ✅ APPROVED!
- • Or: Buy a cheaper house ($300K instead of $350K) → DTI drops to 45%
⚠️ What Counts Toward DTI:
✅ Counts:
- • Mortgage payment (PITI)
- • Student loans
- • Car loans
- • Credit card minimums
- • Personal loans
- • Alimony/child support
❌ Doesn't Count:
- • Utilities (electric, water, gas)
- • Phone bills
- • Insurance (car, health)
- • Groceries
- • Entertainment
✅ Check If You Qualify for a Mortgage
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Check Your Qualification (Free) →Step 3: Verify Stable Income (2 Years Required)
What Lenders Check:
W-2 Employees (Easiest to Verify)
- • Last 2 years W-2 forms
- • Last 2 months pay stubs
- • Verbal employment verification (lender calls your employer)
- • Requirement: 2 years same employer or same industry
Self-Employed (Harder to Verify)
- • Last 2 years tax returns (1040 + Schedule C)
- • Year-to-date profit & loss statement
- • Business bank statements (3-6 months)
- • CPA letter verifying income
- • Requirement: 2 years self-employment history
Other Income Sources (Must Be Documented)
- • Rental income (lease agreements + tax returns)
- • Alimony/child support (divorce decree + 6 months bank deposits)
- • Social Security/disability (award letter + bank deposits)
- • Investment income (brokerage statements)
- • Bonus/commission (2-year average from W-2s)
🚨 Income Red Flags That Get You Denied:
- • Job hopping: 3+ jobs in 2 years (shows instability)
- • Recent job change: New job less than 30 days ago
- • Career change: Switched from teacher to real estate agent (unrelated fields)
- • Declining income: Made $80K in 2024, $60K in 2025 (lender uses lower amount)
- • Cash income: Can't prove income with tax returns or pay stubs
Step 4: Save for Down Payment (3.5-20%)
Down Payment Requirements by Loan Type:
FHA Loan
Best for first-time buyers
3.5%
Conventional Loan
Standard mortgage
5-20%
VA Loan
Veterans only
0%
USDA Loan
Rural areas only
0%
Down Payment Calculator:
$300,000 house
3.5% FHA: $10,500
20% Conventional: $60,000
$400,000 house
3.5% FHA: $14,000
20% Conventional: $80,000
$500,000 house
3.5% FHA: $17,500
20% Conventional: $100,000
💡 Down Payment Assistance Programs:
Can't afford 3.5-20% down? 4,200+ programs offer grants and low-interest loans for down payments.
- • State programs: $5,000-$25,000 grants (don't need to be repaid)
- • City programs: $2,500-$15,000 forgivable loans
- • Employer programs: $1,000-$10,000 relocation assistance
- • Gift money: 100% of down payment can come from family
Step 5-7: Employment, Reserves, Clean Record
Step 5: Employment History (2+ Years)
Lenders want to see 2 years continuous employment in the same job or industry.
✅ Good Employment History:
- • Same employer for 2+ years
- • Same industry with job promotions
- • Gap less than 30 days between jobs
❌ Bad Employment History:
- • 3+ jobs in 2 years
- • 6+ month employment gap
- • Career change to unrelated field
Step 6: Cash Reserves (2-6 Months)
Lenders want to see 2-6 months of mortgage payments in savings after closing.
Example:
• Mortgage payment: $2,000/month
• Required reserves: $4,000-$12,000 in savings
• This proves you can handle unexpected expenses (roof repair, job loss, etc.)
Step 7: Clean Financial Record
Lenders check for bankruptcies, foreclosures, and late payments.
Waiting Periods After Financial Issues:
- • Bankruptcy Chapter 7: 2-4 years
- • Bankruptcy Chapter 13: 1-2 years (if discharged)
- • Foreclosure: 3-7 years
- • Short sale: 2-4 years
- • Late mortgage payments: 12 months clean history
FAQ
Can I get approved with bad credit?
Yes! FHA loans accept credit scores as low as 580 (or 500 with 10% down). Focus on lowering your DTI, saving a larger down payment, and showing stable income. You'll pay a higher interest rate, but you can refinance later when your credit improves.
How long does mortgage approval take?
Pre-approval: 24-72 hours. Final approval: 30-45 days from application to closing. Timeline depends on appraisal speed, underwriting backlog, and how quickly you submit documents.
Can I get approved with student loans?
Yes! 43% of first-time buyers have student loans. The key is managing your DTI. Enroll in an income-driven repayment plan to lower your monthly payment from $500+ to $100-$200. This frees up DTI and allows you to qualify for a bigger mortgage.
What if I'm self-employed?
Self-employed borrowers need 2 years tax returns showing consistent income. Lenders average your income over 2 years. If your income is declining, they use the lower year. Tip: Don't write off too many business expenses—it lowers your qualifying income.
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