Getting your first mortgage requires a credit score of at least 580-620, stable income for 2 years, a debt-to-income ratio under 43% and a down payment of 3-3.5% minimum. First-time buyers have access to special programs including FHA loans (3.5% down), conventional 97 loans (3% down) and state-sponsored down payment assistance that can cover part or all of your upfront costs.
How to Get a Mortgage: Requirements for First-Time Buyers
Lenders evaluate four main factors when deciding whether to approve your mortgage.
Credit Score Requirements
Your credit score determines which loan programs you qualify for and what interest rate you’ll pay.
| Loan Type | Minimum Score | Best Rate Score |
|---|---|---|
| FHA | 580 (3.5% down) | 680+ |
| FHA | 500 (10% down) | N/A |
| Conventional | 620 | 740+ |
| VA | No official min | 620+ preferred |
| USDA | 640 | 680+ |
The difference between a 620 score and 740 score on a $300,000 loan can mean $150+ per month in higher payments.
Jennifer Martinez had a 605 credit score when she started thinking about buying. She spent four months paying down credit cards and disputing an error. Her score jumped to 668, qualifying her for a conventional loan with better terms than FHA.
Income and Employment
Lenders want proof of stable income that will continue.
Standard requirements:
- 2 years in the same field (not necessarily same employer)
- Consistent or increasing income
- Verifiable through pay stubs, W-2s and tax returns
Self-employed buyers need:
- 2 years of tax returns showing business income
- Year-to-date profit and loss statement
- Business license or CPA letter
Income that counts:
- Base salary and wages
- Overtime (with 2-year history)
- Bonuses (with 2-year history)
- Commission (with 2-year history)
- Self-employment income (2-year average)
- Social Security and pension
- Rental income (typically 75% counted)
Marcus Thompson changed jobs three months before applying for a mortgage. Because he stayed in the same field (accounting) and got a raise, the lender approved him without issue.
Debt-to-Income Ratio
Your DTI compares monthly debt payments to gross monthly income. Lenders use two calculations:
Front-end ratio: Housing costs ÷ gross income
- Most lenders want this under 28%
Back-end ratio: All monthly debts ÷ gross income
- Conventional loans: 43-45% max
- FHA loans: Up to 50% with compensating factors
- VA loans: No strict limit, but residual income required
Example calculation:
- Gross monthly income: $6,500
- Proposed housing payment: $1,700
- Other debts: $400
- Front-end DTI: 26% (good)
- Back-end DTI: 32% (good)
Down Payment and Reserves
Different loan programs require different down payments:
| Program | Minimum Down | PMI Required? |
|---|---|---|
| Conventional 97 | 3% | Yes |
| FHA | 3.5% | Yes (MIP) |
| VA | 0% | No |
| USDA | 0% | Annual fee |
| Conventional 80/20 | 20% | No |
Beyond down payment, lenders want to see reserves—money left after closing:
- Conventional: 0-6 months of payments
- Jumbo loans: 6-12 months of payments
- Investment properties: 6+ months per property
First-Time Home Buyer Programs
Several programs make homeownership more accessible for first-time buyers.
FHA Loans
The Federal Housing Administration insures these loans, allowing lenders to accept lower down payments and credit scores.
Benefits:
- 3.5% down payment with 580+ score
- 10% down with 500-579 score
- Lower credit score requirements
- Gift funds allowed for entire down payment
- Seller can contribute up to 6% toward closing costs
Downsides:
- Mortgage insurance premium (MIP) for life of loan
- Upfront MIP of 1.75% added to loan
- Property must meet FHA standards
- Loan limits vary by county
Angela Washington bought her first home with an FHA loan. Her 610 credit score wouldn’t qualify for conventional, but FHA approved her with 3.5% down. Her monthly MIP adds $137 to her payment, but she’s building equity instead of paying rent.
Conventional 97 Loans
Fannie Mae and Freddie Mac offer 3% down conventional loans for first-time buyers.
Benefits:
- Only 3% down required
- PMI can be removed at 20% equity
- No upfront mortgage insurance
- Often better rates than FHA for higher scores
- Higher loan limits than FHA
Requirements:
- 620+ credit score (680+ for best rates)
- At least one borrower must be first-time buyer
- Income limits apply in some areas
HomeReady and Home Possible
Special conventional programs for low-to-moderate income buyers.
HomeReady (Fannie Mae):
- 3% down payment
- Income limits (100% of area median in most areas)
- Allows boarder income and ADU rental income
- Reduced PMI rates
Home Possible (Freddie Mac):
- 3% down payment
- Income limits (80% of area median)
- Sweat equity counts toward down payment
- Reduced PMI rates
VA Loans
For veterans, active military and eligible surviving spouses.
Benefits:
- 0% down payment
- No monthly mortgage insurance
- No minimum credit score (lenders set own)
- Competitive interest rates
- Limited closing costs
Eligibility:
- 90 days active wartime service, or
- 181 days active peacetime service, or
- 6 years National Guard/Reserves
- Surviving spouse of veteran who died in service or from service-connected disability
David Chen served four years in the Army. His VA loan let him buy a $340,000 home with zero down. No PMI saves him $190 per month compared to a conventional loan with 5% down.
USDA Loans
For moderate-income buyers in rural and some suburban areas.
Benefits:
- 0% down payment
- Low mortgage insurance (0.35% annually)
- Below-market interest rates
- Flexible credit requirements
Requirements:
- Property in USDA-eligible area (check eligibility map)
- Household income below 115% of area median
- Primary residence only
State and Local Programs
Most states offer first-time buyer assistance. Common features include:
Down payment assistance:
- Grants (free money)
- Forgivable loans (disappear after 5-10 years)
- Deferred loans (repay when you sell)
- Low-interest second mortgages
Below-market rate loans:
- State housing finance agencies offer rates 0.25-0.5% below market
Tax credits:
- Mortgage Credit Certificates (MCC) provide federal tax credit of 20-40% of mortgage interest paid
Patricia and Roberto Nguyen used California’s CalHFA program. They received a $12,000 forgivable second mortgage for down payment, plus a first mortgage at 0.25% below market rate. After 5 years of ownership, the $12,000 is forgiven.
How to Get the Mortgage: Step-by-Step Process
Follow these steps to get your first mortgage efficiently.
Step 1: Check Your Credit (3-6 Months Before)
Pull your credit reports from all three bureaus at AnnualCreditReport.com.
Look for:
- Errors to dispute
- High credit card balances (pay below 30%)
- Collection accounts
- Late payments
Quick score improvements:
- Pay down credit cards
- Become authorized user on old account
- Don’t close old accounts
- Don’t open new credit
Step 2: Calculate Your Budget (2-3 Months Before)
Use the 28/36 rule as a starting point:
- Housing costs under 28% of gross income
- Total debts under 36% of gross income
Don’t forget ongoing costs:
- Property taxes
- Homeowners insurance
- HOA fees (if applicable)
- Maintenance (budget 1% of home value annually)
- Utilities (often higher than renting)
Step 3: Save for Down Payment and Closing Costs
On a $300,000 home with 3.5% down:
- Down payment: $10,500
- Closing costs (3%): $9,000
- Moving and reserves: $5,000
- Total needed: $24,500
Acceptable down payment sources:
- Personal savings
- Gift from family (with gift letter)
- Down payment assistance programs
- Retirement account withdrawal (penalties may apply)
- Employer assistance programs
Step 4: Get Pre-Approved (1-2 Weeks)
pre-approval involves full document verification and tells you exactly what you can afford.
Documents needed:
- 2 years of tax returns
- 2 years of W-2s
- 30 days of pay stubs
- 2-3 months of bank statements
- Government ID
Apply with multiple lenders. All mortgage inquiries within 14-45 days count as one for scoring purposes.
Step 5: Find a Real Estate Agent
A buyer’s agent represents your interests and typically costs you nothing—the seller pays the commission.
What to look for:
- Experience with first-time buyers
- Knowledge of your target neighborhoods
- Good communication style
- Strong references
Step 6: House Hunt and Make an Offer
With pre-approval in hand, you can shop with confidence.
When making an offer:
- Base price on comparable sales
- Include contingencies (inspection, financing, appraisal)
- Provide earnest money (1-3% of price)
- Set realistic closing timeline (30-45 days typical)
Step 7: Complete the Loan Process
After your offer is accepted:
Week 1-2:
- Finalize loan application
- Schedule home inspection
- Order appraisal
Week 2-3:
- Review inspection, negotiate repairs
- Receive appraisal results
- Provide any additional documents
Week 3-4:
- Underwriting review
- Clear conditions
- Receive clear to close
Week 4-5:
- Receive Closing Disclosure (3 days before closing)
- Final walkthrough
- Close and get keys!
Buying a Home for the First Time: Common Questions
How Much House Can I Afford?
A general guideline: 2.5-3x your annual household income. A household earning $80,000 can typically afford $200,000-$240,000.
However, your actual affordability depends on:
- Down payment amount
- Interest rate
- Property taxes in your area
- Other monthly debts
- HOA fees
Use a mortgage calculator with your specific numbers for accurate estimates.
How Much Do I Need for a Down Payment?
As little as 0% with VA or USDA loans, 3% with conventional or 3.5% with FHA. Most first-time buyers put down 6-7%.
On a $250,000 home:
- 3% = $7,500
- 3.5% = $8,750
- 5% = $12,500
- 10% = $25,000
- 20% = $50,000
What’s the Difference Between Pre-Qualification and Pre-Approval?
Pre-qualification: Quick estimate based on self-reported information. No document verification. Means little to sellers.
Pre-approval: Full document review, credit check and underwriter assessment. Shows sellers you’re a serious, qualified buyer.
Always get pre-approved, not just pre-qualified.
How Long Does It Take to Get a Mortgage?
From application to closing typically takes 30-45 days. However, preparation (improving credit, saving, getting pre-approved) can add months.
Timeline breakdown:
- Pre-approval: 1-3 days
- House hunting: Varies (days to months)
- Under contract to closing: 30-45 days
Can I Buy a House with Student Loans?
Yes. Student loans affect your DTI calculation, but millions of buyers have mortgages alongside student loans.
Tips:
- Income-driven repayment plans show lower monthly payments
- Lenders may use 0.5-1% of balance if loans are deferred
- Pay down other debts to offset student loan impact
Sarah Chen has $45,000 in student loans with a $350/month payment. Her $5,800 gross monthly income still qualified her for a $220,000 mortgage because her total DTI stayed under 43%.
Should I Pay Off Debt Before Buying?
It depends. Pay off debt if:
- It significantly lowers your DTI
- It improves your credit score
- You’ll still have enough saved for down payment
Keep debt if:
- Paying it would drain your savings
- It’s low-interest debt
- Your DTI is already acceptable
What Happens at Closing?
Closing takes 1-2 hours. You’ll sign approximately 100 documents including:
- Promissory note (your promise to repay)
- Deed of trust (security for the loan)
- Closing disclosure (final terms and costs)
- Title documents
Bring government ID and a cashier’s check (or wire transfer confirmation) for your down payment and closing costs.
Frequently Asked Questions
How do I get a mortgage with no credit history?
Some lenders offer “non-traditional credit” evaluation using rent payments, utility bills and other regular payments. FHA loans allow this approach. You can also become an authorized user on a family member’s credit card to build history quickly. Plan for 6-12 months of credit building before applying.
What credit score do I need to buy a house?
Minimum 580 for FHA with 3.5% down, or 620 for conventional loans. VA loans have no official minimum, but most lenders require 620+. For the best rates, aim for 740+. Every 20-point improvement can mean better terms.
How much should I save before buying a house?
Plan for 5-20% of the purchase price total. This covers down payment (3-20%), closing costs (2-5%) and reserves (2-3 months of payments). On a $300,000 home, that’s $15,000-$60,000 depending on loan type and down payment choice.
Can first-time buyers get help with down payment?
Yes. Many state and local programs offer down payment assistance grants or forgivable loans. FHA allows 100% of down payment to come from gift funds. Employer assistance programs and nonprofit organizations also provide help. Check your state housing finance agency website.
What are the hidden costs of buying a home?
Beyond purchase price: closing costs (2-5%), property taxes (varies by location), homeowners insurance, private mortgage insurance (if under 20% down), HOA fees, maintenance (budget 1% of value annually), higher utilities than renting and moving expenses.
Is it better to rent or buy?
Buy if you’ll stay 3+ years, have stable income, want to build equity and can afford the true costs of ownership. Rent if you might move soon, prefer flexibility or if local home prices are extremely high relative to rents. Run the numbers for your specific situation.
Related Articles
Sarah Mitchell
Licensed Mortgage Broker, 15+ Years Experience
Sarah has helped thousands of families navigate the mortgage process. She specializes in making complex loan information easy to understand.