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While landing a competitive mortgage interest rate is often a primary goal for borrowers, finding the best mortgage lender to successfully guide you through the home-buying process can also be an important priority. But with so many choices available, how can you know which lender is the right fit for you? Read on for a look at some of the top factors to consider as you shop for the best mortgage lender for your needs.

How to Choose a Good Mortgage Lender

Thanks to online reviews and comparison sites, researching a wide range of mortgage lenders and home loan options is easier than ever. But it can also be overwhelming. Here are a few strategies that could help you narrow down your choices:

Get Your Finances in Order

It can be useful to have your financial ducks in a row before you start your mortgage research. That way, you’ll have an idea of how much you’ll be able to borrow, and whether lenders might consider you a reliable or risky borrower. Some things you can do to prepare include:

•   Check out your creditworthiness. You can expect lenders to look at your credit scores, credit reports, and other financial factors to assess your ability to pay back the money you borrow. So why not scrutinize your status in advance to see where you stand? (Remember, by improving your numbers, you can better your chances of getting the rate and terms you want.) If you use a money tracker app, or if you go to your bank or credit card company’s website, you can probably check your credit score without paying. You also can get a free credit report from each of the three main credit bureaus just by visiting AnnualCreditReport.com.

•   Determine what you can realistically afford on your income. You may want to use a debt-to-income (DTI) ratio calculator to assess how much of what you earn every month would be going straight toward your debt obligations. Though you may have some wiggle room — depending on the type of loan you want and the lender’s requirements — a good goal is keep your potential housing costs (mortgage payment, homeowner’s insurance, homeowners association fees, property taxes) to 28% or less of your monthly gross income and your total debt payments (housing costs plus credit card payments, car and student loans, etc.) to no more than 36% to 43% of your monthly income.

Familiarize Yourself with Different Types of Mortgage Loans

Though most U.S. borrowers end up getting a conventional loan from a private lender, there are many different types of mortgage loans to choose from. There are government-backed loans, such as Federal Housing Administration (FHA) loans, that can make homebuying more affordable for borrowers — including qualified first-time homebuyers. And there are jumbo loans available for buyers who want a mortgage that exceeds the maximum loan limit for a conforming loan. It’s also important to consider if a fixed- vs. adjustable-rate mortgage is better for your needs, and the loan length you prefer (typically 15, 20, or 30 years).

Comparison-Shop Online

Comparing multiple lenders can help ensure that you find a loan package tailored to your unique financial situation. You can use an online comparison site to see types of loans, interest rates, annual percentage rates (APR), and other terms lenders are offering. Customer reviews and ratings can also be valuable when you shop for a mortgage. And don’t forget to consider how specific loan requirements, like a minimum credit score or down payment amount, might affect your eligibility.

Ask Trusted Sources for a Recommendation

Do you have friends, family members, or colleagues who recently purchased a home? You may want to ask them about their experiences and if they’d use the same lender again. Your real estate professional also may be able to recommend a reputable lender. (Keep in mind that someone who purchased their house years ago may not have had as many choices or opportunities to find the best lender for a mortgage.)

Apply for Preapproval

Most lenders offer a mortgage preapproval process that can give you a solid estimate of your loan costs and interest rate — though it doesn’t mean your final approval is guaranteed or binding. You can get preapproved through several lenders if you want to compare offers.

Recommended: The Cost of Living By State

Types of Mortgage Lenders

There are many different types of mortgage lenders, and each one may have pros and cons, depending on your circumstances.

Direct Lenders

A direct lender is a financial institution (a bank, credit union, or mortgage company) that originates, processes, underwrites, and funds loans to borrowers without intermediaries. Direct lenders establish their own rates and terms. A direct lender may have a brick-and mortar location, serve customers online only, or both.

Correspondent Lenders

Correspondent lenders originate and fund their own loans but quickly sell them on the secondary mortgage market. Because of this, correspondent lenders tend to have stricter lending requirements. And borrowers can expect to work with a new loan servicer soon after they go through their closing.

Portfolio Lenders

Portfolio lenders originate and fund “nonconforming loans” — loans that don’t meet the criteria required for resale to Fannie Mae and Freddie Mac, the government-sponsored entities that purchase most U.S. mortgages. Because they generally don’t sell the loans they originate to investors in the secondary market, portfolio lenders don’t have to use the same eligibility requirements that traditional lenders use to qualify borrowers for conforming loans and government-backed mortgages.

Mortgage Brokers

A mortgage broker is actually a matchmaker, not a lender. These independent, licensed professionals don’t originate or service loans or set rates or fees. But they can help borrowers compare a wide range of mortgage options and connect them with lenders that are a good fit for their particular needs. The broker’s commission is usually a small percentage of the loan amount. It’s typically paid by the lender, but the cost is often passed down to the borrower.

Five Questions You Should Ask a Mortgage Lender

Before you settle on a particular lender and move forward with the mortgage process, here are some questions you may want to ask:

How long could it take to close?

A lender won’t be able to tell you exactly how long your loan will take to close (there may be delays that can’t be controlled), but they can give you an idea of how long it usually takes. This can help you determine if their process works for your timeline.

How much of the mortgage process will be handled in-house?

If the lender does most or all of the loan processing in-house, the operation may be more streamlined. You may also want to ask if the lender will service the loan after you close.

Do you think that the loan I’m interested in is the best fit for me?

Your lender may have thoughts on why you would benefit from one loan type vs. another. If you’re buying your first home, you can also ask about down payment assistance programs and other information specific to your situation.

What length of time do you recommend for a mortgage rate lock, and is there a fee?

A mortgage rate lock keeps your rate from changing for a set period of time, so you won’t pay more if interest rates rise before you close on your loan. You may be able to lock in your rate for 30, 60, or even 120 days, depending on the lender. The cost of the lock can also vary.

How will we usually communicate?

It can be helpful to let your lender know your preferred method of contact so you can reach each other quickly when there’s a question, potential problem, or good news to share.

Recommended: Average Monthly Expenses for One Person

Where to Get a Mortgage

You’ll find there’s a wide range of options available when you’re ready to get a mortgage. The most popular choices include:

Conventional Banks

You can apply online at most larger banks; or, if you prefer, you can head to a local brick-and-mortar branch for one-on-one attention. Still, even if you’re a longtime customer of the bank where you have your checking, savings, and other accounts, you may want to do some research and compare their terms to what other lenders have to offer.

Credit Unions

Like banks, credit unions typically offer a variety of mortgage loans online or in person. But to become a borrower, you may have to meet certain membership requirements, such as living in a certain geographic area or working in a specific profession.

Online Lenders

Some lenders handle every part of the mortgage process online only. This can reduce their overhead costs, and online-only lenders are also known to offer faster approvals. But this approach may be daunting if you prefer to speak to someone face-to-face or want to share certain documents in person.

Mortgage Marketplaces

An online mortgage marketplace collects loan offers from different lenders in one spot. Instead of filling out separate applications for several different lenders, you can enter a few key pieces of information, and the site will list mortgage options from banks, credit unions, and online lenders.

The Takeaway

Buying a home will likely be one of the biggest investments you ever make — which is why it can be critically important to find the best mortgage lender for your transaction. Of course it’s important to look for a competitive interest rate; but when you’re moving through the complicated mortgage process, you’ll also be grateful for a lender that can offer the total package, including good customer service, a solid reputation, lower costs, and favorable loan terms.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How to decide which mortgage lender is best?

When choosing a lender, it’s important to look at several factors, including the types of loans they offer, their reputation for reliability and good customer support, and the interest rate and other loan terms they can provide.

Where is the best place to look for a mortgage loan?

It can be useful to visit a comparison site to shop online for lenders that offer loans, terms, costs, and support services that are a good fit for your needs.

What is the 2/2/2 rule for mortgages?

The 2/2/2 rule refers to the documentation you’ll probably need to provide when you apply for a mortgage: two years of W-2s, two years of tax returns, and your two most recent pay stubs.

What not to say to a mortgage lender?

You shouldn’t ever lie to your lender or withhold relevant information, but you also don’t have to overshare about money problems, marital issues, or concerns about your job.

What is the 3/7/3 rule in mortgages?

The 3/7/3 rule sets specific deadlines for when mortgage lenders must provide disclosures and when you can officially close on your loan. Lenders must send you the initial loan disclosure within three business days of receiving your application. There is a seven-day mandatory waiting period after the initial disclosure. And if your APR changes beyond a set limit, the lender must send a new disclosure, which triggers another three-day waiting period before you can close.

What looks bad on a mortgage application?

Mortgage underwriters are trained to look for red flags when they review loan applications, including low credit scores, a high debt-to-income (DTI) ratio, recent large deposits to your checking or savings account from an undocumented source, unreliable income sources, or a recent bankruptcy.

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Photo credit: iStock/PeopleImages

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

SOHL-Q225-258

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Buying a house with no money down gets you on the path to home ownership much faster than saving up for a large down payment. After all, the average sales price of a home in the U.S. in early 2025 is $503,800; a traditional 20% down payment at that price point would top $100,000!

For the smoothest path to the closing table with a no-money-down loan, you may not need a lot of cash, but you do need a credit score of at least 600. Here’s everything you need to know about what credit score is needed to buy a house with no money down.

Can You Buy a House With No Money Down?

It’s possible to buy a house with no money down, but you’ll need to meet the eligibility requirements that come with certain types of mortgage loans or search for alternative programs that help keep your upfront costs to a minimum. You’ll also need to know what credit score is needed to buy a house with no money down, which can vary based on the type of loan and lender — more details on that below.

Note: SoFi does not offer a zero-down mortgage at this time.

What Is a Zero-Down Mortgage?

Typically, lenders require a down payment on a mortgage, whether you’re buying your first home, taking out a jumbo loan for a luxury property, or getting something in between. The down payment gives you automatic equity in the home, and lowers the lender’s risk since you have a financial investment in the home.

With a zero-down mortgage, also known as a no-down-payment mortgage, you take out a loan for the home’s full purchase price, instead of paying for part of it in cash. As the cost of living in the U.S. increases, this can help you buy a home faster than if you waited to save up a down payment.

How to Buy a House With No Money Down

There are a few different options to explore in order to buy a house with no money down.

Get a Zero-Down Home Loan

There are two primary types of zero-down home loans for first-time buyers, but you’ll need to meet mortgage preapproval requirements.

VA loans are backed by the federal government and designed specifically for veterans, military members, and surviving spouses. You don’t have to make a down payment and won’t have to pay private mortgage insurance. You do, however, need to meet the lender’s requirements for credit and income. Most lenders will be looking for a credit score of 620 for a VA loan, although some may allow a lower score. The higher the loan amount, the more strict a lender’s credit-score threshold may be.

USDA loans, also backed by the government, provide 100% financing for properties located in an eligible zone. The credit score needed for a USDA loan will vary based on the lender. A score of 640 or better is a baseline for many lenders, but even those with lower scores may qualify if they provide additional supporting documents for their application. (Note: SoFi does not offer USDA loans, although it does provide VA loans.)

This option isn’t solely for qualified first-time buyers, but USDA loans come with income limits that may be easier to meet if you’re earlier in your career and home-buying journey. Your income can’t exceed 115% of the area’s median household income. The maximum income level varies depending on family size, since the average monthly expense for one person is less than a family with multiple kids. You can search the USDA’s eligibility site to check eligible property addresses in your area.

Use a Down Payment Assistance Program

Some state and local governments, along with other entities like nonprofits, may offer down payment assistance programs. They’re more common in areas with a high cost of living, so not all of these programs will be available if you live in one of the best affordable places in the U.S.

Consider Alternative Strategies to Pay for a House With No Money

Though less conventional, it is possible to find alternative home financing options, such as seller financing or a lease-purchase agreement. You will need to enlist the help of a lawyer to pull together an agreement that protects you in these scenarios.

Seller financing involves creating a legal agreement directly with the seller, who serves as your lender. The seller typically needs to either fully own the house or just have a small mortgage balance left in order for this to get approved. Together you will negotiate the terms of the loan, including the length of the term and interest rate.

A lease-purchase agreement, also called rent-to-own or lease-to-own, will mean that you start off renting the property and will have the option to buy it after a certain period of time. You may need to pay a fee, and often a sales price is agreed on while you’re renting. A portion of your rent payment usually goes toward the purchase price, serving as a down payment.

Negotiating for closing credits might require you to make a down payment, but an agreement with the seller to cover some of your closing costs will reduce your overall spending. This can be challenging when the majority of the U.S. real estate market currently favors sellers, but the strategy may work with fixer-upper properties or if the inspection comes back with significant issues.

First-Time Homebuyer Loans With a Low Down Payment

Not all homebuyers will qualify for a home loan with no down payment. Here are some alternative options that require smaller down payment amounts.

Conventional mortgages Some mortgage lenders allow qualified first-time homebuyers of any income level to obtain a conventional home loan with just 3.5% down. Conventional loans typically require a credit score of at least 620.

Fannie Mae HomeReady and Freddie Mac Home Possible: Low-income first-time homebuyers may qualify for one of these home loans. The minimum down payment is just 3% and lenders may use your rent history to help supplement a lower credit score. Plus, with Fannie Mae, you could qualify for a $2,500 credit to reduce your loan balance.

FHA loans: These aren’t designed for first-time homebuyers, and you don’t need to worry about meeting income limits. With an FHA loan, you can qualify for a low 3.5% down payment if your credit score is 580 or higher.

How to Find the Best No-Down-Payment Mortgage Lenders

Compare multiple lenders early on in the home-buying process. Even if you qualify for a no-down-payment loan, lenders will vary in their interest rates and closing costs, all of which impact how much you pay upfront and over time.

If you’re trying to keep your cash spending as low as possible, look for lenders that offer closing cost credits for eligible borrowers. Usually they come with income limits and first-time homebuyer requirements. But if you qualify, that could mean extra cash in your pocket at closing — just be sure to check for hidden costs in the form of other fees or higher rates.

Pros and Cons of First-Time Homebuyer Loans With Zero Down

Is a zero-down home loan worth it? Weigh the pros and cons before you get started.

Of course, if you don’t like some of the terms associated with your home loan, you can always apply for a mortgage refinance later on.

The Takeaway

Buying a house is expensive, and using a no-down-payment mortgage can help you become a homeowner faster. But you’ll need to meet a number of eligibility requirements, including credit score minimums, income thresholds, and more. And while there are alternative options available, it’s always crucial to compare lenders, rates, and fees to make sure you’re not taking on hidden costs. Ready to explore some options?

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What credit score do you need to buy a house with no down payment?

It depends on the program and the lender. VA loans technically don’t have a minimum credit score requirement. Many lenders want to see a 620 or higher, though some may accept a score of 600. For USDA loans, the minimum score required by lenders is usually 640.

What credit score is needed to buy a $300K house?

The credit score needed to buy a $300,000 house depends on the type of mortgage. While VA and USDA loans have a minimum of 600 and 640, respectively, FHA loans allow for scores as low as 500 (with a 10% down payment) or 580 (with a 3.5% down payment).

What credit score do I need to buy a $250,000 house?

The credit score needed to buy a $250,000 house depends on the type of mortgage. The lowest credit score you could have and still secure a mortgage would be 500 (for an FHA loan with a 10% down payment). Expect to need a minimum credit score between 580 and 640 for other loans, depending on which kind you choose.

Can I get an FHA loan with no down payment?

You cannot get an FHA loan with no down payment. The least amount you could put down in this situation is 3.5%. You are allowed to obtain this money via a gift from a friend or relative, but you’ll need to follow specific guidelines if you go this route.

How can I get a 700 credit score in 30 days?

Whether you can get to a 700 credit score in a month depends on what is impacting your score — and how high (or low) a score you currently have. Some quick fixes include paying down high credit card balances, identifying and repairing errors in your credit report, and becoming an authorized user on someone else’s credit card — as long as it has a low balance and isn’t delinquent. But even if you already have a fairly good score, it might be hard to achieve a 700 in this brief window of time.

What builds credit the quickest?

In order to quickly build credit, you need to pay all of your bills on time. Late payment entries can quickly derail your score and stay on your credit report for seven years. You can also lower your credit utilization ratio by paying down credit card balances and asking for higher limits (just don’t charge them up).

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Photo credit: iStock/Worawee Meepian

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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Thinking about buying a $300,000 home? Your credit score will play a big role in whether you’ll get approved for a loan and what your interest rate will be. For most conventional loans, you’ll need a credit score of at least 620. But if your credit score is lower, you may still have some options available to you, including a government-backed loan.

What Credit Score Is Recommended to Buy a $300,000 House?

Housing is an important component of the cost of living. However, the price of a home does not directly dictate the credit score that you will need to secure a home loan. That said, it may have an effect on the credit score that lenders prefer to see. The more expensive a house, the more risk the lender is taking on, and the higher the credit score they may prefer.

Your credit score is a three-digit representation of your credit history, including how responsible you have been when paying off debt in the past, and how much debt you’re currently carrying. For most conventional loans, you’ll need a credit score of 620 or more. A conventional loan is the most common type of mortgage loan. It’s not insured by the federal government. Rather it’s backed by private insurers, as are jumbo loans.

Government-backed loans, including Federal Housing Administration (FHA) loans, have lower credit score requirements. FHA loans typically have a minimum credit score requirement of 580 for a loan with a 3.5% down payment. Lower scores aren’t necessarily excluded from the FHA program, but borrowers with a score below 580 will need to make a 10% down payment.

Recommended: Mortgage Refinance

How Much Down Payment for a $300,000 House?

The amount you’ll need to put down for a $300,000 home will depend on your loan. A conventional mortgage typically requires a 3% down payment if you’re buying your first home, and 5% for those who’ve purchased a home in the past. That’s $9,000 or $15,000 respectively.

However, if you want to avoid paying private mortgage insurance (PMI), you’ll need to make a down payment of at least 20%. That’s $60,000 for a $300,000 home.

As mentioned above, FHA loans require a 3.5% down payment ($10,500 on a $300,000 loan) if your credit score is 580 or above. Below this threshold you’ll need to put down 10%, or $30,000 on a $300,000 home. In general, anyone can apply for an FHA loan if they meet these requirements.

VA loans — which are available to eligible veterans, active-duty service members, surviving spouses, and certain members of the National Guard and Reserves — generally have no down payment requirement.

The higher your down payment, the less risk your lender is taking on, and the easier it may be to secure a loan. Lower risk also means that your lender may be willing to offer you lower interest rates and more favorable loan terms, which can decrease the overall cost of borrowing over time.

What Is the Monthly Payment for a $300,000 House?

Mortgage payments are often a big part of an individual’s average monthly expenses. That said, the monthly payment on a $300,000 house can vary widely depending on your interest rate, loan term, and the down payment you’ve made. One way to find out what your payments might look like and what size loan you could be approved for is to seek a mortgage preapproval from a lender.

Here is one example so you can see how costs stack up. Say you wish to purchase a $300,000 home with a 10% ($30,000) down payment. The loan amount is $270,000. Let’s assume you take out a 30-year conventional mortgage at a 6.50% interest rate. You’ll be required to pay PMI, since your down payment is less than 20%. Here’s a breakdown of what you’ll owe monthly.

  Principal and interest: $1,707

  PMI (ranges from 0.5% to 1.5%): $100

  Property taxes (vary by location): $300

  Homeowners insurance (varies by location and coverage): $250

  Total: $2,357 /per month

Recommended: Cost of Living in the U.S.

How to Afford the Down Payment for a $300,000 House

If you’re a first-time homebuyer, down payment assistance programs (DPAs) offered by state and local government and lenders can help you afford the upfront costs of buying a home. They may come in the form of grants that don’t need to be repaid or various types of loans, such as deferred loans or low-interest loans.

If you don’t qualify as a first-time homebuyer or for DPA, you’ll have to work to save up for a down payment in the months and years leading up to a home purchase. Consider saving this money in a dedicated account, so you aren’t tempted to use it for other purposes.

The Takeaway

There’s no one-size-fits-all credit score requirement to buy a $300,000 house. But a score of 620 or higher will open the door to conventional mortgage options, while those with a lower score might consider applying for an FHA loan. A stronger credit score can help you secure a loan with a lower interest rate and better terms. Ultimately, a higher score can help you save thousands of dollars over the long term by qualifying for a mortgage that better suits your needs.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much income do you need for a $300,000 mortgage?

It takes a minimum annual income of $90,000 to afford a $300,000 mortgage. This assumes you don’t have to pay for private mortgage insurance and that you don’t have any other significant debts. This is based on the widely used 28%/36% guideline which suggests you spend no more than 28% of your gross income — the amount of money you earn before any deductions, such as taxes — on housing expenses, which includes mortgage payment, property taxes, and insurance.

What is a good down payment for a $300,000 house?

For a conventional mortgage, first-time homebuyers will need to put down at least 3%. Repeat buyers will need to put down 5%. However, you’ll have to pay for private mortgage insurance if you don’t put down at least 20%. The larger your down payment, the easier it may be to qualify for a mortgage or mortgage preapproval and the more likely your lender is to offer lower interest rate and favorable loan terms.

What credit score do I need to buy a $400,000 house?

To buy a $400,000 home, you’ll need a score of at least 620 for conventional and VA loans. And you’ll need a score of 580 for FHA loans with a down payment of 3.5%. If your score is between 500 and 579, you’ll need a 10% deposit to get an FHA loan.

Can I afford a $250,000 house on a $50,000 salary?

If you apply the 28%/36% rule, you would have 28% of your salary to spend on your home expenses (mortgage, taxes, insurance). This means your monthly housing budget is $1,166. The size of your mortgage payments will depend on your down payment, interest rate, and loan term, but it would be difficult to afford a $250,000 house with a budget of $1,166 per month.

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Photo credit: iStock/Sean Anthony Eddy

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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Loans backed by the U.S. Department of Veterans Affairs (VA) have several benefits for U.S. veterans, service members, and surviving spouses, including competitive interest rates and no down payment requirement. And as of 2020, there are no VA loan limits if you’re borrowing for the first time. If you’ve already purchased a home with a VA loan, you may be subject to the same loan limits as conventional mortgages, which range from $806,500 to $1,209,750 for single-family homes, depending on your county.

If you’ve been wondering what the VA loan limit is, here’s a closer look at how VA loan limits work and when they come into play.

What Are VA Home Loan Limits?

VA home loan limits refer to the maximum VA loan the Department of Veterans Affairs will guarantee. The guarantee from the VA means that it will pay a certain amount to your VA loan lender if you default on your loan.

If you have full entitlement, meaning you don’t have any other active VA loans, the VA will guarantee 25% of your home loan if it’s over $144,000. If your loan is less than $144,000, the VA will guarantee $36,000.

If you don’t have full entitlement, the VA will lower its guarantee amount by subtracting the amount of entitlement you’ve already used. In this case, you may have to make a down payment on the home that you buy with your VA loan.

What Are VA Loan Limits if You Have Full Entitlement?

So, what is the maximum VA loan limit if you have full entitlement? Since 2020, there has been no limit. You can take out as big a loan as you can qualify for with no down payment requirements. Your borrowing power will only be limited by the lender’s underwriting criteria, which includes thresholds for credit, income, and debt-to-income ratio.

The elimination of VA loan limits for borrowers with full entitlement gives many people more homebuying power without having to worry about a down payment or turn to a jumbo loan, which can have a stricter approval process.

You likely have full entitlement if you’re a first-time homebuyer. Alternatively, you may qualify if you borrowed a VA loan in the past but already paid it off in full after selling your property or having a foreclosure or short sale on your property.

Recommended: Average Monthly Expenses for One Person

When Do VA Loan Limits Apply?

VA loan limits apply if you don’t have full entitlement. Here are some circumstances where you wouldn’t have full entitlement to this type of mortgage loan:

•   You already have a VA loan and are still paying it back.

•   You paid off a VA loan in full but still own the home you used it for.

•   You refinanced your VA loan into a non-VA loan and still own the home.

•   You had a short sale, deed in lieu of foreclosure, or foreclosure on a previous VA loan and didn’t pay the loan back in full.

If any of these scenarios apply, your VA loan limits would match the conforming home loan limits for your county. However, you may be able to borrow more than your county loan limit with a VA loan if you’re able to make a down payment.

VA Loan Limits by County

If you don’t have full entitlement, your VA loan limits often fall at $806,500. However, they can go up to $1,209,750 in areas with a high These limits are the same as the Federal Housing Finance Agency’s conforming loan limits and can be found on the U.S. Federal Housing website. The limits are adjusted each year and are higher for two-, three-, and four-unit homes.

If you need a bigger mortgage, you might consider a jumbo loan. High-income earners that make $250,000 to $500,000 per year tend to be the most suitable candidates for jumbo loans.

VA Loan Limits Example

If you don’t have full entitlement, VA loan limits will apply. To give an example, let’s say you’re looking to purchase a home in one of the more affordable places in the U.S. that has a loan limit of $806,500.

With full entitlement, the VA would guarantee up to 25% of that amount, or $201,625. If you’re already using $30,000 of your entitlement, the VA would subtract that amount and offer a guarantee of $171,625. Depending on the lender, you may be permitted to borrow a loan up to four times that amount, or $686,500. Borrowing a larger loan may be a possibility, but you’d have to make a down payment and pay closing costs.

If you are curious about how a VA loan stacks up against a conventional mortgage, you can go through the mortgage preapproval process to see what conventional loan amount and terms you might qualify for. You can also explore down payment assistance programs that could help you with a down payment if you don’t apply for the VA loan.

What VA Loan Limits Mean for You

If you’re buying your first home or have already paid off a previous VA loan in full, VA loan limits probably won’t affect you at all. Borrowers with full entitlement can take out a VA loan of any size without a down payment, as long as they can meet a lender’s financial criteria. You could potentially buy a high-cost home with a loan that exceeds traditional mortgage limits, as long as the monthly payments fall within your budget.

If you have an active VA loan or another reason why you don’t have full entitlement, VA loan limits will restrict how much you can borrow without making a down payment. Your limits will fall between $806,500 and $1,209,750, depending on your county. These limits are adjusted annually and may increase from year to year.

Understanding your VA loan limits is important because it impacts your homebuying power, as well as your down payment options. A major benefit of VA loans is their 0% down payment requirement, so make sure you’re clear on where your entitlement stands and any VA loan limits that apply based on your history of borrowing and the county where you want to purchase a home. Remember, too, that entitlement is not the same as eligibility. Your first step toward a VA loan is to obtain a Certificate of Eligibility from the VA.

The Takeaway

VA loan limits may be a non-issue if you’re borrowing for the first time. Instead of worrying about loan restrictions, you can turn your focus to determining your home-buying budget, finding a home, and choosing a lender. If you don’t have full entitlement, a VA lender can help you determine how much you can borrow and whether you might need to make a down payment.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Is there a maximum loan amount for VA loans?

There’s no maximum loan amount for VA loans for homebuyers with full entitlement who don’t have an active VA loan at the time of borrowing. However, lenders may limit how much you can borrow based on your credit, income, debt-to-income ratio, and other aspects of your finances.

Can I buy a million dollar home with a VA loan?

You can buy a million dollar home with a VA loan if you have full entitlement and strong enough finances to meet a lender’s approval. Borrowers without full entitlement will be subject to loan limits, which vary by county and range from $806,500 to $1,209,750.

How much do I need to make to buy a $400K house with a VA loan?

You would need a minimum income of roughly $115,000 and minimal other debts to be able to afford a $400,000 house with a VA loan. This assumes you have full entitlement and do not make any down payment. This estimate aligns with the 28/36 rule, which recommends spending no more than 28% of your gross monthly income on your mortgage payments and no more than 36% on your mortgage plus other debt payments. Don’t forget to take the cost of living into account as you crunch the numbers.

What is the jumbo limit for a VA loan?

There’s no jumbo limit for a VA loan if you have full entitlement — you can borrow as much as you need, subject to lender approval. In fact, the VA removed loan limits for borrowers with full entitlement in part to help them avoid jumbo loans, which can have high down payment requirements and strict standards for loan approval.

Can I have two VA loans at the same time?

You can have two VA loans at the same time, but you won’t have full entitlement. That means the VA will guarantee a lower amount of your loan (or nothing at all). In some cases, you may be required to make a down payment on your second VA loan.

How much income do I need for a $300K mortgage?

The income you’ll need for a $300k mortgage depends on several factors, including your average monthly expenses, down payment amount, interest rate, and repayment term. A general rule is to keep your mortgage payment below 28% of your gross monthly income (and your mortgage plus other debts below 36%).

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Photo credit: iStock/Prostock-Studio

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Mortgage preapproval could take a couple days or up to a couple weeks depending on the lender and the effort required to verify the necessary financial information. Though mortgage preapproval isn’t a requirement, getting preapproved can help determine your home-buying budget and having a preapproval letter in hand demonstrates to sellers that you’re a serious buyer.

Here’s a closer look at how mortgage preapproval works, including how long preapproval lasts and steps to potentially speed up the process.

What Is a Mortgage Preapproval?

A mortgage preapproval is a letter or statement from a mortgage lender that indicates that you are conditionally approved to borrow up to a certain amount for a home purchase. It generally includes the type of mortgage loan you would likely qualify for and the interest rate you’d get if you ultimately apply for a mortgage.

Whether you’re buying your first home or in a competitive market, having mortgage preapproval gives some assurance to sellers that your financial ducks are in a row to buy a home. Maybe you aren’t buying in one of the best affordable places in the U.S. — in that case, it can be especially helpful to have preapproval as a guide to what you can actually afford. For many buyers, it can be advantageous to get preapproved before you start looking at properties so you’re prepared to make an offer.

You need to submit an application to get mortgage preapproval. This usually entails a hard credit check and submitting documentation related to income, assets, and debts.

How Long Does It Take to Get Preapproved?

The sooner you get preapproved, the sooner you can get serious about house-hunting. So how long does it take for mortgage preapproval?

After you submit your application, the mortgage preapproval process can take around 10 days to complete. Lenders will review the financial documentation submitted with your application, run a hard credit check, and potentially verify your employment.

Gathering the necessary financial information and completing the application itself can take some initial legwork. Before applying, you might also spend time browsing lenders to compare options and find mortgage terms that best fit your needs, so it’s worth factoring these steps into your timeline.

Recommended: Down Payment Assistance Programs

How Long Does a Mortgage Preapproval Last?

When a lender issues a mortgage preapproval letter, it’ll include the period of time the preapproval is good for. Typically, mortgage preapproval lasts for 60 to 90 days, though it’s possible that lenders could impose a shorter time limit.

Mortgage preapprovals expire because interest rates and a borrower’s financial situation are subject to change over time. Employment status or savings levels can change with the ups and downs of the job market and cost of living in the U.S. Getting your preapproval renewed may require less work than the initial application, but it may involve another credit check and resubmitting financial documents. Keep in mind that significant financial changes could impact how much you qualify for.

Is Preapproval the Same as Prequalification?

You may hear the terms preapproval and prequalification used interchangeably. While both can give you an idea of how much house you can afford, there are key differences between the two. Here’s a quick look at mortgage prequalification vs. preapproval:

Mortgage prequalification involves a high-level review of your finances to get an estimate of how much you might be able to borrow, and at what interest rate. Unlike mortgage preapproval, prequalification doesn’t include a hard credit check and you won’t be required to submit financial documents like tax returns.Typically, you’ll need to just provide the lender with details on your income, employment, monthly debts, and anticipated down payment.

Getting prequalified is a quicker process than preapproval, since your information doesn’t require the same level of verification by the lender. Thus, prequalification is less of a guarantee that you’ll qualify for financing, but it can be used to inform your home-buying budget.

How Long Does Mortgage Approval Take After Preapproval?

Suppose you’re preapproved and have your offer on a house accepted. How long will it take to get approved for a mortgage to get to the closing table? Mortgage approval can take anywhere from 30 to 60 days, though lenders often aim to time the approval with your closing date in the contract.

Even if you’re preapproved, you’ll need to complete a home loan application with your chosen lender. You’ll finalize your choice of the type of home loan and your mortgage term.

Once your materials are submitted, the lender has several steps to complete. They’ll order a title search and an appraisal to determine whether the offer price matches the property value. This is also when the underwriting process occurs, which involves verifying your financial information and qualifications as a borrower. Though it’s optional, a home inspection would be completed at this stage, too.

Recommended: Average Monthly Expenses for One Person

Factors Affecting Mortgage Preapproval

Lenders consider a variety of financial information before issuing mortgage preapproval. Here are several of the key factors for getting preapproved.

•   Credit score: Lenders use your credit score to assess your risk as a borrower. Credit score requirements vary by lender and mortgage type. If you qualify as a first-time homebuyer, for instance, you could be approved for an FHA loan with a credit score of 500.

•   Debt-to-income (DTI) ratio: How much home you can afford is determined in part by your DTI ratio, which is calculated by dividing your monthly debt payments by your gross monthly income. A DTI ratio of 36% or lower is considered good, though it may be possible to get preapproved with a higher DTI ratio.

•   Down payment: Having enough money to cover a down payment and closing costs is another important factor. Certain government-backed loans have no down payment, while jumbo loans require 10% down. Closing costs can range from 2% to 5% of your mortgage principal.

•   Employment: Your income and employment history are considered when a lender assesses your ability to repay the loan.

How to Speed Up the Preapproval Process

The mortgage preapproval process can vary by lender. When comparing mortgage options from different lenders, you can also look into the expected timeline for preapproval.

Having all the necessary documents prepared could help speed up the process. The lender will likely require that you submit the following materials and information:

•   Proof of identity: A valid driver’s license, passport, or other government-issued ID.

•   Proof of income and employment: Pay stubs, tax returns, and bank statements if self-employed.

•   Proof of assets: Bank statements, investment account statements, and gift letters from family, if applicable.

•   Debt and expenses: Documentation of student loans, auto loans, and any other recurring debt or monthly expenses.

The Takeaway

How long does preapproval for a mortgage take? It can require anywhere from a couple days to a couple weeks, so it’s smart to plan for around 10 business days. However, having all the necessary personal and financial information ready can help speed up the preapproval process. Once preapproved, you’ll have a good idea of how much house you can afford, which can inform your house hunt.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How quickly can you get preapproved for a mortgage?

Some borrowers get preapproved for a mortgage in as little as a couple days, though the process doesn’t always move this quickly. It may take some time for lenders to verify your financial information and issue a preapproval letter.

How long does preapproval usually take?

The typical timeline for mortgage preapproval is around 10 days. However, delays can occur due to missing documents or delays in verification by an employer.

Do mortgage preapprovals hurt your credit score?

Mortgage preapproval involves a hard credit check which stays on your credit report for up to two years. This could put a temporary ding in your credit score — usually less than five points — for up to a year.

Is a preapproval a final approval?

Mortgage preapproval is not a guarantee for final approval on a mortgage. Borrowers still need to submit a mortgage application after having an offer accepted on a property.

Can you be denied after preapproval?

Yes, you can be denied after being preapproved for a mortgage due to changes in employment or personal finances. Borrowers can also be denied because of issues with the property itself or an appraisal that comes in below the purchase price.

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Photo credit: iStock/Photography and Illustrator

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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