Many people decide they’re ready to buy a home, but they’re often surprised to learn what it really takes to qualify for financing. The truth is, buying a home is one of the biggest financial decisions most people will ever make—and while it’s easier than ever to get pre-approved for a loan, there are still some basic requirements that banks and lenders need to see. Some buyers meet those criteria right away. Others might need a little more time or guidance—and that’s perfectly okay.
The important thing is to understand what banks are really looking for when you apply for a home loan. Once you do, the whole process starts to make a lot more sense.
Real Estate Revolves Around Two Things: Money and Risk
When it comes to real estate and lending, everything comes down to two things: money and risk.
From a lender’s perspective, the goal is to loan you money, earn interest, and make sure they get paid back in full. The risk is that you might not be able to make your payments, in which case the lender would have to foreclose on the home. Foreclosures are costly, time-consuming, and rarely result in a full recovery of what they loaned out.
So the entire lending process is really about minimizing risk while making responsible loans that benefit both the borrower and the lender. To do that, they look at three main factors: your income and employment history, your credit score, and your savings/down payment.
1. Income and Employment History
One of the first things a lender will ask about is your income. They need to know that you have a reliable, ongoing way to pay back the loan—not just right now, but for years to come.
Typically, lenders want to see:
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At least 6 months at your current job (sometimes more, depending on the loan type)
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A 2-year employment history, ideally within the same field or line of work
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For self-employed buyers, 2 years of tax returns showing consistent income
This is about showing stability. If you’ve recently changed jobs but stayed in the same industry, that’s usually not a deal-breaker. But if you’re bouncing around or just started a new venture, you may be asked to wait a few months or provide additional documentation.
The goal isn’t to nitpick—it’s to verify that you’ll be able to handle the financial commitment of a 15-, 20-, or 30-year mortgage.
2. Credit Score
Your credit score is essentially a measure of how well you’ve managed debt in the past. The better your credit history, the more confident a lender feels about giving you a loan.
Most loan programs require at least a 620 credit score, but the higher your score, the better your terms—meaning you could qualify for a lower interest rate, which saves you money every month (and over the life of the loan).
What affects your credit score?
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Payment history (on-time payments matter most)
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Credit utilization (how much of your available credit you’re using)
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Length of credit history
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Mix of credit types (loans, credit cards, etc.)
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New credit inquiries
Even if your credit isn’t perfect, don’t panic. Many buyers qualify with mid-range scores, and there are steps you can take to improve your credit with the right guidance. This is another area where working with a good team—lender and realtor—can make all the difference.
3. Down Payment and Savings
This part often surprises buyers: You don’t always need 20% down to buy a house. In fact, many loan programs allow you to buy with as little as 3% down.
However, the more money you can put down, the less risk for the bank—and the better your overall loan terms.
Why is this important?
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A down payment shows financial responsibility
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It gives the lender some equity cushion in case of foreclosure
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It lowers your monthly mortgage payment
Statistically, buyers who put 10% or more down are far less likely to default on their loans compared to those who put down 3.5%. This doesn’t mean low-down-payment buyers can’t succeed—it just means lenders view those loans as slightly higher risk and might price the interest rate accordingly.
Beyond your down payment, lenders also like to see that you have reserves—extra money in the bank after closing. This could be as little as a few months of mortgage payments saved up, but it helps show that you’re financially prepared if something unexpected comes up (like job loss, medical expenses, or car repairs).
Can You Qualify If You’re Not Perfect in All 3 Areas?
Here’s the good news: You don’t need to be perfect in all three areas to qualify. If you have strong income and stable job history, you might be able to get approved with a smaller down payment or average credit. Or if you have great savings and an excellent credit score, but your job history is a little short, there might still be options available.
What matters is the overall picture. Lenders are looking at the full story—your debt-to-income ratio, your history, your credit behavior, your savings, and your goals.
Why Working With Professionals Matters
Here’s where a good realtor and a smart lender make all the difference.
A good realtor isn’t just there to open doors. They’re there to ask the hard questions, guide you through the process, and help you get in the best possible position to buy. They’ll connect you with lenders who will give you honest feedback and work with you to make a plan if you’re not quite ready.
And here’s something most people forget: Your realtor and your lender only get paid when you actually buy a home. So if either of them tells you, “Let’s pump the brakes,” you should really listen. It’s not because they don’t want to help—it’s because they do. They’re trying to protect you from jumping into something before you're truly ready.
A responsible real estate professional isn’t in a rush to get you into just any home. They want to help you get the right home, under the right terms, at the right time.
So What Should You Do If You’re Not Ready Yet?
If you’ve read this and you’re thinking, “I’ve got a little work to do,” that’s completely normal. Many buyers start the process with a few things to fix—and with the right help, they make progress quickly.
Maybe you need to:
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Save up a bit more money
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Work on building your credit score
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Get more consistent job history
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Pay down some debt
None of this means you can’t buy a home. It just means you’re on the path to doing so responsibly. And when the time is right, you’ll be in a stronger position to make offers, get better loan terms, and avoid surprises along the way.
Let’s Make a Plan Together
If you're thinking about buying a home, let’s talk. Whether you’re ready today or just getting started, I’d love to help you figure out where you are—and what steps to take next.
We can review your situation, connect you with a great lender, and put together a game plan that makes sense for you. Homeownership isn’t a dream reserved for perfect buyers—it’s for prepared buyers.
Leah Rolen | Keller Williams Paris
📞 469-744-5309
Realtor based in Paris Texas, helping Northeast Texas buyers get ready to own with confidence.
I am not a lender, just a Realtor looking to educate buyers on the home buying process, always refer to a lender for up to date and specific financing guidelines.
