To qualify for a home loan in the United States, applicants must demonstrate stable income, acceptable credit history, and sufficient savings for a down payment or closing costs. Lenders typically require a credit score of at least 620 for conforming loans, though scores above 740 often secure better terms. A debt-to-income (DTI) ratio below 43% is standard, and a down payment of 5% to 20% is generally needed, with conforming loans requiring 20% in some cases. Documentation including pay stubs, tax returns, and bank statements is mandatory.

The stringent requirements stem from historical housing market crashes, particularly the 2008 financial crisis, which were partly linked to lax lending practices. Since 2014, federal regulations like the Consumer Financial Protection Bureau’s qualified mortgage rule have enforced stricter DTI limits (43%) and down payment standards to mitigate risk. Data from the Federal Housing Finance Agency shows that loans exceeding 43% DTI or with less than 5% down accounted for 18% of delinquent loans from 2015 to 2020. Additionally, the U.S. Census Bureau reports that 62% of first-time buyers rely on mortgages, with average down payments averaging 13% in 2022—a figure that rises to 24% for loans requiring private mortgage insurance. Lenders also prioritize steady employment, as the Bureau of Labor Statistics notes that 85% of mortgage approvals require proof of at least two years of consistent income. These factors collectively ensure lenders minimize defaults while supporting responsible homeownership.