Minimum Credit Scores for a Home Loan

• Requesting a mortgage loan with a score in the low 600s or 500s will possibly trigger a rejection from a mortgage company. Sub-prime loans are risky, and many lenders no longer offer these products. Instead, these lenders require home applicants to maintain a minimum credit score of 680. Credit scores within this range or higher indicate a history of good credit habits, and applicants in this range are less likely to have a history of late payments, collection accounts and other derogatory information on their credit reports. Timely payments and clearing up credit report mistakes can help raise credit scores.
  
  

Proof of Income

• Credit scores affect a mortgage loan approval as does the ability to verify income and prove that a mortgage applicant is capable of managing a mortgage loan. To verify employment and income, mortgage lenders ask for detailed information about an applicant's personal finances. This includes reviewing the applicant's most recent tax statements or contacting employers for salary information. Stability also plays a role in mortgage lending, and applicants without two years of steady employment may receive a mortgage rejection.
  
  

Present Debts

• Owing money to many different creditors can impact an applicant's ability to acquire a mortgage loan. A high debt to income ratio in home lending involves paying more than 36 percent of gross monthly income on debt payments. Applicants who exceed the required debt ratio may have to postpone buying a home until they pay down credit card balances and other loans. Lenders are flexible, and some may increase the minimum debt ratio. However, this usually comes with a price, and applicants are charged a higher interest rate on the mortgage loan.
  
  

Down Payment Guidelines

• A mortgage company will rarely issue a home loan without a down payment. The down payment on a mortgage loan varies, and the sale price determines how much an applicant must forward to the home loan lender. A 20 percent down payment provides buyers with instant home equity, and lenders will waive private mortgage insurance with 20 percent down. Applicants who cannot afford a large down payment should plan on putting at least 5 percent down on a mortgage loan.