What to Know When It Comes to Mortgage Qualification

Qualifying for a mortgage, while more difficult than many people think, is not as hard as may borrowers believe. Fannie Mae recently came out with a study that found many people are daunted by the possibility of stringent mortgage requirements. In truth, it’s not actually that hard to meet the financial requirements that mortgage lenders tend to set for borrowers.

A Perfect or Great Credit Score Isn’t Required

Yes, you read that right; even people whose credit scores are hardly “good” have a chance at getting a mortgage. Even if it’s their very first time to buy a home for themselves! Several loan programs exist that help borrowers with questionable credit along. In some cases, a down payment isn’t required at all. Sensitivity to FICO does not apply to every single mortgage on offer out there.

Stringent All the Way Is A Myth

In 2018, the Economic and Strategic Research team of Fannie Mae studied consumer misconceptions about mortgage loan applications. Researchers found that what was going on is that consumer didn’t really get the basic thresholds they had that could help them qualify for a mortgage.

There was a gross overestimation of ratios people needed for the down payment, debt-to-income (DIT) and credit score areas of mortgage approval.

People are generally under the misconception, for example, that 650 is the bare minimum credit score needed in order to qualify for a mortgage. The real score? A mere 580-which is a huge difference to that end!

When asked about minimum down payment needed in order to buy a home, respondents had a median answer: 10% of the final sales price of a home. A lot of mortgage programs actually only need at least 3%! 

For DTRs, the median response of the Fannie Mae survey participants was 40% or almost half. This means they think their loan applications would only be approved if their total debts in a month (mortgage payments and all) come out to 40% of the gross monthly income.

Borrowers’ monthly debts shouldn’t equate to more than half (50%) of their gross income in a month.

Home Loan Requirements

Someone looking to take on a home loan must have a clear history of paying bills in a timely manner as well as prove their ability to afford monthly payments on time. Borrowers usually have no minimum credit score. However, their chances of qualifying for a mortgage and getting a lower interest rate increase with their score. Lenders generally consider a FICO score of 740 or higher incredibly formidable. 

Cash available and payment history will go a long way in convincing lenders to grant the loan being applied for. When a borrower has cash reserves for more than six months post-closing, they’re deemed as highly capable to pay the loan back on time with no issues.


Qualifying for a mortgage isn’t as difficult as some people may think. There is a common misconception regarding ratios needed to get loans approved. People tend to assume those figures are higher than they actually are.

Looking for a mortgage lender? Check out Hawkins Home Loans today! We’ve got incredibly low rates, amazing service and a process that’s made to be stress-free.