4 factors control approval
Buying your first home: what banks actually look at
First-time home buyers should target 20% down to avoid PMI, but 3-5% down loans are available through FHA, VA, and conventional 97 programs. Your total housing cost (PITI) should stay under 28% of gross income, and total debts under 36%. Get pre-approved before house-hunting — sellers prioritise pre-approved offers, often above slightly higher unfunded ones.
Level
Try calculatorKey takeaways
04 · ideas- DTI above 43% disqualifies most buyers — fix debts before applying
- 20% down eliminates PMI, but 3–5% programs exist for first-time buyers
- Getting pre-approved before house hunting is non-negotiable in competitive markets
- Multiple rate shopping within 14–45 days counts as a single credit inquiry
The mortgage process feels opaque, but lenders are actually looking at four specific things. Understanding each one tells you exactly what to fix before you apply.
The four pillars of mortgage approval:
- Credit score — determines whether you qualify and at what rate
- Debt-to-income ratio (DTI) — determines how much house you can afford
- Down payment — determines your loan size, rate, and whether you pay PMI
- Employment history — lenders want 2 years of stable income
- Credit score: 620 minimum, 740+ for best rates
- DTI: 43% maximum back-end (all debts ÷ income)
- Down payment: 3% minimum (first-time buyer programs)
- Employment: 2 years same employer or same field preferred