To check mortgage eligibility, start by reviewing your credit score, which must typically exceed 620 for conventional loans. Calculate your debt-to-income (DTI) ratio by dividing monthly debt payments by gross monthly income; most lenders require a DTI below 43%. Gather documents like pay stubs, tax returns, bank statements, and W-2 forms. Apply for a pre-approval letter from a lender, which outlines the loan amount and terms you qualify for. Compare loan types (e.g., conventional, FHA, VA) based on credit score, down payment, and income. Finally, submit a mortgage application with the lender.

The eligibility process ensures borrowers meet financial criteria to avoid default. Credit scores directly impact loan approval and interest rates; a score below 620 may qualify only for government-backed loans (e.g., FHA loans require a minimum 580 score). The DTI ratio reflects repayment capacity, with lenders avoiding ratios above 43% to mitigate risk. For example, the Urban Institute (2022) found DTIs exceeding 45% increase mortgage default risk by 30%. Pre-approval letters streamline homebuying by setting a budget, as 68% of homebuyers in the 2023 National Association of Realtors survey found pre-approval critical for seller confidence. Government data shows FHA loans accounted for 13% of mortgages in Q1 2023, often aiding buyers with lower down payments (3.5%). Lenders also verify stable employment, with 90-day job gaps often disqualifying applicants. Combining these factors ensures lenders assess both short-term repayment ability and long-term stability, reducing defaults and aligning with Federal Housing Finance Agency guidelines.