Understand what lenders look for
How credit and debt-to-income review can affect a loan application, and ways to prepare for a lender review.
Credit Requirements by Loan Type
Your credit score is one of the most important factors in determining your loan eligibility, interest rate, and required down payment. Different loan programs have different minimum requirements. Here is a breakdown by program:
| Loan Type | Min. Score | Notes |
|---|---|---|
| Conventional | Varies by lender | Credit treatment varies by program and complete scenario. |
| FHA | Varies by lender | Credit and down-payment requirements vary by program, lender, and complete application. |
| VA | Varies by lender | Eligibility and lender requirements vary by complete scenario. |
| USDA | Varies by lender | Area, income, program, and lender requirements vary. |
| Jumbo | Varies by lender | Credit, reserve, and documentation requirements vary. |
| Non-QM / Bank Statement | Varies by lender | Program and documentation requirements vary. |
| DSCR | Varies by lender | Property-income and personal-credit treatment vary by program. |
How credit is pulled
Lenders may review credit reports from the major bureaus and apply lender-specific policies for individual or joint applications. Ask a lender how credit inquiries may be considered for your scenario.
Turn Times is a licensed mortgage broker, not a lender, and is not affiliated with or endorsed by the VA, FHA, HUD, or any government agency.
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Start my mortgage inquiryDTI Explained — Debt-to-Income Ratio
DTI (debt-to-income ratio) measures how much of your gross monthly income goes toward debt payments. It is one of the primary factors lenders use to evaluate your ability to repay a new loan.
There are two DTI calculations: front-end (housing expense only) and back-end (all monthly debt obligations). Most lenders focus on back-end DTI.
DTI Calculation Example
| Loan Type | Max DTI (Back-End) | Notes |
|---|---|---|
| Conventional | Varies by lender | Automated-underwriting and compensating-factor treatment vary by file. |
| FHA | Varies by lender | Manual and automated underwriting requirements vary by program and file. |
| VA | Varies by lender | Residual-income, debt, and complete-file review can apply. |
| USDA | Varies by lender | Area, income, automated-underwriting, and complete-file requirements vary. |
| Jumbo | Varies by lender | Requirements vary by investor and complete scenario. |
| Non-QM | Varies by lender | Requirements vary by program and documentation type. |
How to Improve Your Approval Odds
If your credit score or DTI is close to the limit, there are concrete steps you can take to improve your position before applying.
Review revolving balances
Credit utilization can affect a credit profile. Consider discussing existing balances with a qualified professional before applying.
Consider new credit carefully
New credit inquiries and accounts can affect a credit profile. Consider their potential effect before applying.
Pay off or pay down installment debt
Eliminating a car payment or student loan reduces your DTI directly. Even paying down a balance to reduce the minimum payment helps.
Dispute errors on your credit report
Review your credit reports and dispute information you believe is inaccurate through the appropriate credit bureau process.
Add a co-borrower
If your income or credit score is borderline, adding a co-borrower with stronger credit or income can significantly improve your approval odds and rate.
Increase your down payment
A larger down payment reduces your LTV, which reduces risk for the lender. This can compensate for a lower credit score or higher DTI in some programs.
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See where you stand and what options are available.
Tony will walk you through your qualification scenario and show estimated options — no commitment, no credit pull.
Start my mortgage inquiryWhat Lenders Look For — The 4 Cs
Lenders evaluate every mortgage application using four primary criteria, often called the "4 Cs of credit."
Credit
Your credit score and history. Shows how reliably you've repaid debt in the past. Lenders look at payment history, utilization, length of history, and derogatory marks.
Capacity
Your ability to repay — measured by DTI. Compares your monthly debt obligations to your gross monthly income. Lower DTI = more capacity.
Capital
Your assets and reserves. Down payment, closing costs, and post-closing reserves are reviewed under lender and program requirements.
Collateral
The property itself. Lenders order an appraisal to confirm the property value supports the loan amount. LTV (loan-to-value) is the key metric.
Compensating factors matter
If one area is weaker, strength in another may matter. A lender reviews credit, assets, income, property, reserves, and the complete application together.