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It is possible to get a home loan while on maternity leave. The process may involve your lender verifying your “temporary leave income,” if any; your regular income; and your agreed-upon date of return. Anyone on a standard temporary leave is considered employed, whether the absence is paid or unpaid.

Read on to learn more about buying a home while pregnant and how this will impact your ability to get a mortgage.

Buying a House While Pregnant

Hey, why not take on two of the biggest life stressors at once? Sometimes it just happens this way, with parents preparing for a baby and a new home and mortgage.

First, consider if you can wait a bit to buy a home. It may lead to less stress overall during the pregnancy. Plus, the added pressure of a deadline may lead to hasty decision-making that buyers could regret.

And unless an employer is covering moving expenses, add that sizable cost to all the rest.

But if the move can’t be avoided because of a job relocation or other circumstances, it may be important to find a home before the baby arrives. Which does have a silver lining: Saving for a down payment could interfere with goals like saving for a child’s college tuition.

Another possible benefit to buying a house while pregnant is that the relocation could lead to a better school district or area to raise a child.

Ultimately, the decision to buy a house while pregnant is personal.


💡 Quick Tip: Want the comforts of home and to feel comfortable with your home loan? SoFi has a simple online application and a team dedicated to closing your loan on time. No surprise SoFi has been named a Top Online Lender in 2024 by LendingTree/Newsweek.

What Is the FMLA?

The Family and Medical Leave Act, or FMLA, gives eligible employees job protection and up to 12 weeks of unpaid leave a year in the event of:

•   Childbirth

•   Adoption or foster child care

•   Care for a spouse, child, or parent with a serious health condition

•   A personal serious health condition

•   Qualifying exigencies arising from covered active duty or “call to covered active duty status”

The FMLA guarantees that the employee can return to their job or an equivalent one and that they’ll receive health care benefits during their leave.

Employees are eligible if they work for a company that has 50 or more staffers and have completed at least 1,250 hours of work in the previous year.

In addition to the FMLA’s 12 unpaid weeks off, more and more states are enacting paid family leave laws. Currently, 13 states plus the District of Columbia have made this mandatory. And your employer may cover your pregnancy, childbirth, and recovery thanks to short-term disability insurance. Your benefit would be a percentage of your normal earnings.

Recommended: How Much Does it Cost to Adopt a Child?

How Maternity Leave Impacts a Mortgage

Before diving into the nuances of maternity leave and its impact on qualifying for a mortgage, here’s a quick refresher course on the home-buying process.

Mortgage approval from a lender primarily hinges on two factors:

•   Creditworthiness. How likely is the borrower to pay back the loan, based on their credit history?

•   Ability to pay. Does the borrower generate enough income, and have a certain debt-to-income ratio, to make the monthly mortgage payments?

The lender may contact an employer to verify a borrower’s employment status and income.

Why could getting loans for pregnant women prove a challenge? Income. Consider these points:

•   As long as the lender can verify that the borrower is employed — and remember, someone on temporary leave is considered employed — and generates enough income to cover the mortgage, that could be enough.

•   Expectant borrowers aren’t legally required to disclose their pregnancy to a lender. However, the employer can tell the lender about impending maternity leave when they call to verify employment status.

•   If a borrower is going on unpaid leave, they may need to disclose it to the lender. That’s because the period without pay may qualify as a financial hardship, which a borrower is required to inform a lender of.

•   The lender can’t assume the mother-to-be won’t return to work after maternity leave. Lenders consider that the mother will return to work after maternity leave and continue bringing home paychecks.

•   Before approval, the lender will ask the borrower for written notice of her intent to return to work, and may ask for an expected return date.

•   The mortgage lender may request a tax slip from the last calendar year if the borrower is a salaried employee.

•   A lender may approve the mortgage if your employer verifies in writing that you will return to your previous position or a similar one after your maternity leave. The lender will also consider the timing of the first payment.

•   If the borrower will have returned to work when the first mortgage payment is due, the lender can consider regular income in qualifying for the mortgage.

•   If the borrower will return to work after the first mortgage payment due date, the lender must use the borrower’s temporary leave income (if any) or regular employment income, whichever is less, and then may add available liquid financial reserves.

•   VA loans don’t count temporary leave income towards qualifying for a mortgage, however.

💡 Quick Tip: Want the comforts of home and to feel comfortable with your home loan? SoFi has a simple online application and a team dedicated to closing your loan on time. No surprise SoFi has been named a Top Online Lender in 2024 by LendingTree/Newsweek.

Should I Buy a Home While on Maternity Leave?

For those who qualify for a mortgage while on maternity leave, the question may be, “Should I buy a house while on maternity leave?” not “Can I buy a house while on maternity leave?”

As mentioned, moving can be an incredibly stressful process, pregnancy or no pregnancy. And even if you made a budget for a baby, life has a way of throwing in surprises.

Homeownership can also come with financial surprises. The majority of homeowners reported paying for an unexpected repair within the first year.

Having a child and buying a home both require saving some significant cash. By budgeting, doing the two simultaneously is possible. So it’s your call. Not taking the double plunge could give you time to review what you need to buy a house.

Recommended: First-Time Homebuyers Guide

Home Loans With SoFi

Pregnancy is not a legal limiting factor in a mortgage lender’s eyes, but getting a home loan while on maternity leave will depend on your income, savings, work return date, and credit history.

Whether you’re on a temporary leave or not, it can be worthwhile to take a look at your home loan 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.

FAQ

Does being on maternity leave affect getting a mortgage?

It can, but only in the sense that maternity leave can affect a homebuyer’s reported income. If buyers anticipate an unpaid maternity leave, they may need a sizable savings account.

Should you buy a home on maternity leave?

Buying a home while on maternity leave depends on your family’s needs and finances. But moving can be stressful, and adding infant care can be a lot to handle.

Who does FMLA cover?

The Family and Medical Leave Act provides 12 weeks of unpaid, job-protected leave per year for eligible employees in the case of the birth or adoption of a child or placement of a foster child, and for other reasons.

Photo credit: iStock/FatCamera

*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.

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.

SOHL0124035

Despite what the name might suggest, a homestead exemption isn’t some kind of dusty old prospector or settler law. Many states have these statutes on the books; they are designed to protect a primary residence from creditors in a bankruptcy filing.

If the Smiths file a Chapter 7 bankruptcy, how much equity they can protect with an exemption will be one of the factors determining whether they will be able to keep their home.

In a Chapter 13 bankruptcy, they won’t lose their home, but they will have to pay creditors an amount equal to the value of the property they can’t protect with an exemption, or their disposable income, whichever is more.
Before declaring bankruptcy, it’s best to consider the alternatives.

This guide will provide an overview of homestead exemptions as applied to bankruptcy, state by state.

What Is Homestead Exemption?

If you’re wondering what a homestead exemption is, it’s a provision in a state’s law that can legally protect a home from creditors in situations such as declaring bankruptcy or enduring the death of a homeowner’s spouse.

In these ways, a homestead exemption can both literally provide you with shelter (a roof over your head) and protection financially, possibly avoiding a situation in which you must lose your residence. That said, this exemption will not prevent foreclosure if a homeowner defaults on their mortgage.

You may be curious about what is the Homestead Act and if it’s the same thing as homestead exemption. They are two different things: The Homestead Act was an 1862 law that granted 160 acres of Western land in the U.S. to anyone who promised to farm it. It was designed to settle the West and drive economic growth.

What States Have a Homestead Exemption?

It’s easier to name the states that don’t have a homestead exemption than those that do since the vast majority of them offer this protection.

Currently, the only states without specific homestead exemptions are New Jersey and Pennsylvania. If you live in one of those states, then you have an idea of where you stand on potential shields with homestead exemptions — although other state and even federal homestead exemption provisions may potentially assist anyone, in any state.

If you live in any of the other 48 states, know that there are many more asterisks to hunt for, depending on your situation and financial plans.

Even if you live in a state that offers homestead exemptions, you may want to find ways to save money on your mortgage. These strategies, such as refinancing a home loan or requesting a new tax assessment, can help you weather financial storms by reducing your monthly payments.

Recommended: Understanding Bankruptcy: Is It Ever the Right Option?

Which State Has the Best Homestead Exemption?

It is true that some states are more favorable than others for seeking the exemption. But no state is literally “best” to homestead in. Many individual factors are worth weighing in your assessment of what — and where — is advantageous.

Before reading the following, an asterisk: Because homestead exemptions are protections for primary residences, you cannot claim an exemption on an investment property or vacation home.

Some states allow bankruptcy filers to use federal bankruptcy exemptions instead of the state exemptions.

The federal homestead exemption amount is calculated every three years. For the period from April 1, 2022, to March 31, 2025, it allows you to protect up to $27,900 of the equity in your home. In cases where you and your spouse file taxes separately, do not live together, maintain separate homesteads, or (according to at least one court) do not have a direct financial connection with each other, each spouse can claim a separate homestead, up to the amount allowed by an individual.

Also, most states allow a “wildcard” exemption, which allows you to protect any kind of property from bankruptcy proceedings. This can be of particular help if one or more of a debtor’s other exemptions falls short of protecting their equity. A wildcard exemption amount can be divided among multiple items.

As of April 1, 2022, the federal wildcard exemption is $1,475, plus up to $13,950 of any part of the federal homestead exemption that has not been used.

Since there’s so much variability in local, regional, and state codes and how they define the homestead exemption, it’s wise to consult local authorities or websites detailing the law’s specifics when you are in a situation that may trigger these laws.

Here’s a rundown of what you might call homestead states that offer some of the strongest protections via exemptions. “Strongest” here is being interpreted as either affordances for high exemptions or greater flexibilities in the law — but other factors, such as cost of living, should also be a consideration:

1. California. California has two systems for the homestead exemption. Under one system, homeowners can exempt up to $600,000 of equity in a house. In the other system, they can exempt up to $31,950 of home equity. Determining what you can access requires research and/or legal counsel.

2. Florida. Under the Florida exemption system “homeowners may exempt an unlimited amount of value in their home or other property covered by the homestead exemption. However, the property cannot be larger than half an acre in a municipality or 160 acres elsewhere.” The exemption can also be claimed by the spouse or children of a deceased owner.

3. Iowa. An unlimited value in one home or a one-unit apartment can be sought in protection. The property must be in a city or town and is limited to one-half acre or 40 acres elsewhere.

4. Kansas. An unlimited amount of value can be sought in protection, but homeowners are limited in the amount of land they can protect. Homeowners can protect up to 1 acre of property if they live within city limits or up to 160 acres of farmland.

5. Minnesota. You can protect up to $450,000 of equity in your home and land or up to $1,125,000 of equity if your land (up to 160 acres) is used for agricultural purposes.

6. Oklahoma. Residents can exempt the entire value of their homes, but the homestead can’t be larger than a half acre if you live in a city, town, or village or up to 160 acres if you live elsewhere. (If you use more than 25% of the total square footage of your property for business, your exemption is limited to $5,000.)

7. Rhode Island. The exemption applies for up to $500,000 of equity.

8. South Dakota. If your home is less than 1 acre in a town or 160 acres in any other type of area, all of your equity is exempt.

9. Texas. For residences on 10 acres or less in a city, town, or village or 100 acres or less in the country, Texas offers an unlimited homestead exemption.

10. Washington. This state’s generous homestead exemption varies depending on the county the homeowner lives in, from $172,900 in Ferry to $729,600 in King County, where Seattle is.

Recommended: Getting Approved for a Personal Loan After Bankruptcy

Homestead Exemptions in Other States

Here’s all the rest of the states and what homestead exemptions they offer:

1. Alabama. The Alabama Department of Revenue indicates that at the state level, homestead exemptions have a maximum value of $16,450. It only applies on land area that is not more than 160 acres.

2. Alaska. Homeowners may exempt up to $72,900 of their home or other property covered by the homestead exemption.

3. Arizona. Homeowners can exempt up to $250,000 for a house and the land it’s on, a cooperative or condominium, a mobile home and the land it’s on, provided the person lives in the dwelling.

4. Arkansas. You can seek an unlimited amount of equity in 80 rural acres or one-quarter of an urban acre.

5. Colorado. Up to $75,000 of equity in a home or other property, such as a mobile home, is protected. The amount increases to $105,000 if the homeowner, spouse, or dependent is disabled or 60 or older.

6. Connecticut. The state of Connecticut protects up to $75,000 of equity in real property, a co-op, or a manufactured home occupied at the time of filing bankruptcy. The exemption rises to $125,000 if a creditor is collecting for hospital costs.

7. Delaware. Exempts up to $125,000 in real property or a manufactured home that was used as a principal residence.

8. Georgia. Homeowners may exempt up to $21,500 of their home or other property covered by the exemption (the amount increases to $43,000 for married filers). They can also apply $10,000 of any unused portion of the exemption to another property they own — a “wildcard” exemption.

9. Hawaii. If you’re the head of a household or over 65, you can exempt up to $30,000 of equity. If you’re not the head of the family, you may protect up to $20,000 of equity in your home.

10. Idaho. A filer can protect up to $175,000 in equity in a home or mobile home.

11. Illinois. Protects up to $15,000 in equity in your home, which includes a farm, mobile home, lot with buildings, condominium, or cooperative.

Recommended: How Often Can You Refinance Your Home?

12. Indiana. A debtor can exempt up to $19,300 in real estate or personal property used as a residence. In addition, if you are married and filing jointly, that figure rises to $38,900.

13. Kentucky. Up to $5,000 of equity can be claimed.

14. Louisiana. Homeowners are allowed to exempt up to $35,000 of home equity, and more if their debts were due to what’s considered a catastrophic or terminal illness or injury.

15. Maine. Up to $80,000 of equity in property used as a residence can be claimed. The amount can be increased to $160,000 in equity if you have a minor dependent residing with you, or if you are 60 or older or disabled.

16. Maryland. Exempts residential property value up to $25,150 (husband and wife may not double).

17. Massachusetts. The state automatically protects up to $125,000 in home equity, and up to $500,000 for those who file and receive the increased exemption (this amount also applies to the elderly or disabled).

18. Michigan. Each homeowner and their dependents can exempt up to $40,475 in a property covered by the homestead exemption. If the homeowner is 65 or older or disabled, the exemption amount increases to $60,725.

19. Mississippi. An exemption of up to $75,000 of equity in the real estate you live in can be claimed, as long as the property is less than 160 acres.

20. Missouri. You can exempt up to $15,000 of equity in the real estate in which you live or will live, and spouses who file a joint bankruptcy can double the exemption.

21. Montana. Up to $350,000 in equity can be protected as applied to up to 320 farm acres, a quarter of a city acre, or one residential acre outside a municipality.

22. Nebraska. Up to $60,000 can be protected on a home, provided the owner is either a head of household, married, or over age 65, and the property does not exceed 160 acres.

Recommended: How Much Does It Cost to Refinance a Mortgage?

23. Nevada. Up to $605,000 in equity in a home can be claimed.

24. New Hampshire. You can protect up to $120,000 in equity.

25. New Mexico. Up to $60,000 of equity in your home can be protected; that increases to $120,000 being available to spouses who co-own property.

26. New York. The homestead exemption amount varies greatly depending on the county. If the property is in the counties of Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam, the exemption is $179,950. If the property is in the counties of Dutchess, Albany, Columbia, Orange, Saratoga, or Ulster, the exemption amount is $149,975. For any other county in the state, the exemption amount is $89,975.

27. North Carolina. Homeowners may exempt up to $35,000 of their home or other personal property. Homeowners who are 65 or older whose spouse is deceased may exempt up to $60,000, provided the property was previously owned by the debtor as a tenant by the entirety or as a joint tenant with rights of survivorship.

28. North Dakota. Homeowners can protect up to $100,000 of equity in their home when declaring bankruptcy.

29. Ohio. The state allows for the protection of up to $145,425 of equity as part of the homestead exemption. Spouses who file a joint bankruptcy may double that amount.

30. Oregon. A property owner may be exempt up to $40,000. Married couples, however, may be exempt up to $50,000.

31. South Carolina. The state’s law protects up to $63,250 in equity in a home or real estate used as a residence, with spouses who file a joint bankruptcy being able to double the exemption.

32. Tennessee. Homeowners can exempt up to $5,000 of equity — and that amount goes up to $7,500 for joint owners and $25,000 if there’s at least one minor child who is a dependent. People 62 and older can exempt up to $12,500 of equity in their home—$20,000 if married, and $25,000 if the spouse is also 62 or older.

33. Utah. Homeowners may exempt up to $43,300 to protect their home, provided it is their primary personal residence.

34. Vermont. An exemption up to $125,000 of the equity in a home, condo, or mobile home can be claimed; it can’t be doubled, however, in cases of joint bankruptcy filing.

35. Virginia. This state allows for protection of $5,000 of real estate or personal property as a “wildcard” exemption. That number doubles to $10,000 if the individual is age 65 or older.

36. West Virginia. Homeowners may exempt up to $35,000 of their home or other property. That figure increases to $70,000 if you are married, you and your spouse both own the property, and you file bankruptcy together.

37. Wisconsin. A single person can protect up to $75,000 of equity in a home; spouses can double the amount to $150,000.

38. Wyoming. In this state, up to $20,000 of equity in a home can be shielded from bankruptcy. This can double if you are married, you and your partner own the property together, and you file for bankruptcy jointly.

Still with us? If you don’t see a state listed above, that means it’s one of the two (New Jersey or Pennsylvania) that doesn’t offer any homestead exemptions for use in a bankruptcy filing.

The Takeaway

Homestead exemption rules can help protect your home in instances of a bankruptcy filing and can be very helpful during a difficult time. These guidelines differ greatly by state, but are worth investigating. If you can’t keep your head above financial water, these exemptions may allow you to keep your home.

Refinancing a mortgage may also provide some relief to a struggling homeowner. In addition to offering an array of mortgage loans, SoFi also can help you refinance at competitive rates and with a hassle-free process.

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
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.

SOHL-Q424-150

A mortgage preapproval letter is usually good for 30 to 90 days, and some lenders will lock the rate for that time.

Having a letter of preapproval from a financial institution can help ensure that you’re ready to snap up a home you love.

What Is Mortgage Preapproval?

Mortgage preapproval has become an essential part of the home-buying process. Real estate agents often want to see a preapproval letter before showing houses.

Note: A SoFi Verified Preapproval Letter is valid for 90 days.

A letter shows sellers that you are serious about buying their home — even if you’re a first-time homebuyer — and that a mortgage lender is likely to give you a home loan of a specific amount quickly.

The lender will review your credit history, credit score, income, debts, and assets to determine the amount you tentatively qualify for.

Preapproval will help you focus on homes that are in your price range. Knowing how much of a mortgage you can afford is important when you don’t want to waste time reviewing homes outside your range.

Mortgage Preapproval Process

The mortgage process starts informally for many would-be homebuyers.

Some buy into the 28% rule — spend no more than 28% of gross monthly income on a mortgage payment — and play with calculators like this home mortgage calculator with taxes and insurance or the one later in this article.

Seeking mortgage preapproval means you’re getting serious. First, you’ll need to understand the different types of mortgage loans — fixed rate, adjustable rate, conventional, government insured (FHA, VA, USDA), jumbo — and what you can qualify for.

Then you’ll need to apply for a loan from one to several lenders and provide a good deal of documentation. Each lender will perform a hard credit inquiry, and you’ll receive a loan estimate within three business days.

If you’re shopping for a home loan, allowing multiple mortgage companies to check your credit within 14 or 45 days, depending on the credit scoring model being used, will minimize the hit to your credit scores.

How Long Does It Take to Get Preapproved?

It usually takes seven to 10 business days to receive a preapproval letter after submitting all the requested information.

Mortgage Preapproval Letter

Other than stating the specific amount you’re preapproved for, a mortgage preapproval letter may outline stipulations to gain the loan, such as maintaining your employment or not taking on any additional debt.

How Long Does Mortgage Preapproval Last?

Some lenders will make a commitment of 60 or 90 days. That time frame tends to work, since homebuyers typically shop for a home for 10 weeks, according to the National Association of Realtors®.

Other lenders will issue preapproval for only 30 or 45 days.

Recommended: How Mortgage APR Works

Mortgage Prequalification vs. Mortgage Preapproval

Since they sound similar, it’s worth mapping out the difference between prequalification and preapproval.
Prequalification is a key first step, when borrowers tell lenders about their income, assets, and debts. Lenders use that unverified information, and usually a soft credit inquiry, to give a ballpark estimate of how much they might be willing to lend.

The response is quick: You can often get prequalified immediately or within a day or two. Just realize that prequalification does not mean that a lender is guaranteeing a loan.

The mortgage preapproval process is a deeper dive and requires documentation.

To gauge whether you qualify for a mortgage, lenders will scrutinize:

•   Income: Employees will need to provide pay stubs, W-2s, and tax returns from the past two years, as well as documentation of any additional income, such as work bonuses. Self-employed workers often need two years’ worth of records and a year-to-date profit and loss statement, although many lenders and loan programs are flexible.

•   Assets and liabilities: You’ll need to provide proof of savings, investment accounts, and any properties. Lenders view assets as proof that you can afford your down payment and closing costs and still have cash reserves.

Lenders also look at monthly debt obligations to calculate your debt-to-income ratio.

•   Credit score: Your credit score is a three-digit representation of your credit history.

Recommended: What Is Considered a Bad Credit Score?

Once your lender has reviewed the information, it may offer a preapproval letter. Importantly, receiving preapproval from a lender does not obligate you to use them.

Estimate Your Mortgage Payment

Before you seek prequalification or preapproval, you might want to get an idea of how much your monthly mortgage payment could be. Use the mortgage calculator below to quickly see the difference in mortgage payments based on down payment, interest rate, and a 15- or 30-year term.

What Should I Do If My Mortgage Preapproval Expires?

Lenders put an expiration date on preapproval letters because they need to have your most up-to-date financial information on hand. The credit, income, debt, and asset items they reviewed for your preapproval typically need to be updated after the letter expires, and your credit may be checked again.

You can minimize the effect of “hard pulls” on your credit score by avoiding seeking a renewal when you’re not actively shopping for a home.

If your finances have mostly stayed the same, your lender is likely to renew your preapproval.

Finalizing Your Mortgage

If you find a house while your mortgage preapproval is still valid, you can choose a lender and move on to finalizing your mortgage application. At this point, in many cases, the lender will check again to see if there have been any changes in your financial situation.

The mortgage underwriter will review all the information, order an appraisal of the chosen property and a title report, and consider your down payment. Then comes the verdict: approved, suspended (more documentation is needed), or denied.

Your mortgage is officially approved when you receive a final commitment letter. A closing date can be scheduled. It generally takes 43 days to close on a house, but it could happen in as little as 20 days.

Buyers may want to minimize changes, like applying for other loans or credit, when a home loan is in underwriting.

The Takeaway

How long is mortgage preapproval good for? Often 30 to 90 days. Getting prequalified is a smart precursor to getting preapproved for a mortgage. Preapproval can give you a competitive edge in a tight home market, and helps you more clearly understand how your home mortgage loan will affect your monthly budget.

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.

FAQ

How does mortgage preapproval affect my credit score?

The preapproval process involves a hard credit inquiry, which may cause a dip in your credit score. Each hard pull may lower your credit score but typically by less than five points. Multiple hard inquiries are usually counted as one inquiry as long as they are made within the same 14 to 45 days.

What’s the difference between mortgage prequalification and preapproval process?

Prequalification usually takes just minutes and requires you to provide only the most basic financial information in the application process. It also results in only a soft inquiry on your credit score. Preapproval will require more in-depth information, such as pay stubs and tax returns, and involves a hard credit inquiry. Getting preapproved may take a week or 10 days.

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.

SOHL-Q424-114

Conventional loans — mortgages that are not insured by the federal government — are the most popular type of mortgage and offer affordability to homebuyers.

Private mortgage lenders originate and fund conventional loans, which are then often bought by Fannie Mae and Freddie Mac, publicly traded companies that are run under a congressional charter.

By buying and selling these mortgages, Fannie and Freddie help to ensure a reliable flow of mortgage funding.

Requirements for Conventional Loans

It can be confusing to know how to qualify for a mortgage.

Just realize, for one thing, that a higher credit score is usually required for a conventional home loan than an FHA loan backed by the Federal Housing Administration, a type popular among first-time buyers.

Here are factors a lender will consider when sizing you up for a conventional loan.

Your Credit Score

You’ll usually need a FICO credit score of at least 620 for a fixed-rate or adjustable-rate mortgage.

The FICO score range of 300 to 850 is carved into these categories:

•   Exceptional: 800 to 850

•   Very Good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Poor: 300 to 579

In general, the higher your credit score, the better the interest rates you’re offered.

Down Payment

Putting 20% down is desirable because it means you can avoid paying PMI, or private mortgage insurance, which covers the lender in case of loan default.

But many buyers don’t put 20% down. The median down payment on a home is 15%, according to a recent study by the National Association of Realtors®.

Conventional loans require as little as 3% down for first-time homebuyers, and the down payment can be funded by a gift from a close relative; a spouse, fiancé or domestic partner; a buyer’s employer or church; or a nonprofit or public agency. The gift may require a gift letter for the mortgage.

Just keep in mind that the smaller the down payment, the higher your monthly payments are likely to be, and PMI may come along for the ride until you reach 20% equity.

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) helps a lender understand your ongoing monthly debt obligations relative to your gross monthly income.

To calculate back-end DTI:

1.    Add up your monthly bills (but do not include groceries, utilities, cellphone bill, car insurance, and health insurance).

2.    Divide the total by your pretax monthly income.

3.    Multiply by 100 to convert the number to a percentage.

In general, lenders like to see a DTI ratio of 36% but will accept 43%.

The Fannie Mae HomeReady® loan, for lower-income borrowers, may allow a DTI ratio of up to 50%.

In any case, the lower your DTI ratio, the more likely you are to qualify for a mortgage and possibly better terms.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the amount of the mortgage you are applying for compared with the home value. The higher the down payment, the lower the LTV ratio.

Fannie Mae typically sets LTV limits at 97% for a fixed-rate mortgage for a principal residence (think: 3% down) and 85% for a fixed or adjustable loan for a one-unit investment property.

When LTV exceeds 80% on a conforming loan, PMI will likely apply, although some borrowers employ a piggyback loan to avoid mortgage insurance.

Conventional Conforming Loan Limits

Many loans are both conventional and conforming — meaning they meet the guidelines of secondary mortgage market powerhouses Fannie Mae and Freddie Mac, which buy such mortgages and often package them into securities for investors.

Conventional conforming loans fall below limits set by the Federal Housing Finance Agency (FHFA) every year.
Staying under a conforming loan limit often equates to a lower-cost mortgage because the loan can be acquired by Fannie and Freddie.

The conforming loan limits for 2026 in many counties in the contiguous states, Washington, D.C., and Puerto Rico rose with market prices:

•   One unit: $832,750

•   Two units: $1,066,250

•   Three units: $1,288,800

•   Four units: $1,601,750

In high-cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the 2026 conforming loan limits are:

•   One unit: $1,249,125

•   Two units: $1,599,375

•   Three units: $1,933,200

•   Four units: $2,402,625

If you’re curious about your county’s specific conforming loan limits are, you can check out this FHFA guide.

Nonconforming Loans

Word games, anyone? Nonconforming loans are simply mortgages that do not meet Fannie and Freddie standards for purchase. They usually take the form of jumbo loans and government-backed loans.

A homebuyer or refinancer who needs a mortgage beyond the FHFA limits can seek a jumbo mortgage loan. A jumbo loan is still a conventional loan if it’s not backed by a government agency; it’s just considered a “nonconforming” loan.

FHA, VA, and USDA mortgages — those backed by the Federal Housing Administration, Department of Veterans Affairs, and the U.S. Department of Agriculture — are also nonconforming loans.

Nonconforming mortgage rates for jumbo loans may be higher because the loans carry greater risk for lenders, but when the nonconforming loan is backed by the government, its rate might skew lower than conventional conforming rates.

The Takeaway

Conventional loan requirements are good to know when you’re looking at the most popular type of mortgage around. Would-be homebuyers will want to make sure their credit score, debt-to-income ratio, and down payment numbers are lined up as favorably as possible before pursuing their dream property.

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.

FAQ

Are there any drawbacks to a conventional loan?

The main drawback to a conventional loan is that you will need to make some type of down payment on the property. It doesn’t need to be the 20% down payment that was common in decades past. But even a low down payment of, say, 3.5% could add up to tens of thousands of dollars given today’s home prices.

What’s the main reason I might not qualify for a conventional loan?

The most common reason someone might not qualify for a conventional home loan is usually related to credit — perhaps the applicant has a credit score below 620, or maybe there is some other significant warning sign on the credit report, such as a history of delinquencies or bankruptcy.

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For a conventional mortgage loan, you typically need a credit score of 620 or higher to indicate that you are likely to repay your debt on time and get approved. However, there are other types of loans that may be available for people with lower scores. In addition, with a higher score, you may qualify for more favorable rates and terms.

For many, buying a home is a huge financial step, representing the biggest purchase they’ll ever make in their life. Read on to learn more about how your credit score impacts your ability to access a home loan and which terms are available to you.

Average Credit Score to Buy a House

About 70% of mortgages are conventional loans, making these far and away those most common mortgage type. For a conventional mortgage, lenders will typically require a minimum credit score of 620. That said, on average, homebuyers had a credit score of 758 in 2024, considerably higher than the required minimum.

On the topic of credit scores, here’s how the FICO® Score, a popular credit-scoring model, arranges its credit score ranges:

•   300-579: Poor

•   580-669: Fair

•   679-739: Good

•   740-799: Very good

•   800-850: Exceptional or excellent

Recommended: What Is the Starting Credit Score?

What Credit Score Do I Need to Buy a House?

As mentioned above, the credit score you need to buy a house will vary depending on the loan type you apply for. In general, necessary credit scores will range from 500 to 700. The higher the score, the easier it generally is to secure credit and qualify for favorable terms and interest rates.

Minimum Credit Scores by Home Loan Type

There are several different types of home loans you may apply for depending on your circumstances, including conventional loans, jumbo loans, FHA loans, VA loans, and USDA loans. Each type of loan has a different minimum credit score requirement.

Conventional Loans Minimum Credit Score

A conventional loan is a home loan that is backed by private lenders. It is not backed or insured by the government. This is the most common type of home loan and usually requires a minimum credit score of 620. If your credit score is higher than that (say, in the very good or excellent ranges), you may qualify for lower interest rates and better terms.

Jumbo Loans Minimum Credit Score

Jumbo loans are loans that are too big to be covered by conventional loans as determined by the Federal Housing Finance Agency (FHFA). According to the FHFA, in 2025, loans bigger than $806,500 require a jumbo loan in most counties. Jumbo loans usually have a minimum credit score of 700, one of the highest credit score thresholds among mortgage options.

FHA Loans Minimum Credit Score

A Federal Housing Administration, or FHA, loan is one that is backed by the federal government. This program helps make buying a house more affordable for families with low or moderate incomes. Government backing means these loans may be extended to individuals who would otherwise likely be seen as risky by conventional lenders. FHA loans typically have a low minimum credit score requirement of 500 with a 10% down payment and a 580 credit score with a 3.5% down payment.

VA Loans Minimum Credit Score

A VA loan is partially guaranteed by the Department of Veterans Affairs. They are available to veterans, service members, and their families, and some lenders will require a minimum credit score of 620. That said, there is no official minimum credit score requirement, so you may be able to access a VA loan with a lower score. If that is your situation, you may have to provide additional documentation in order to be approved.

USDA Loans Minimum Credit Score

USDA loans are guaranteed by the U.S. Department of Agriculture and are available in certain individuals in rural areas. They often look for a minimum credit score of 580, but as with VA loans, there isn’t a strict requirement. You might qualify for a USDA loan with a lower score if a lender reviews your financials and determines you are creditworthy.

Related: The 52 Week Savings Challenge

How Your Credit Score Affects Mortgage Rates

Your credit score is a three-digit representation of your credit history. Higher scores demonstrate that you have been responsible with your credit, paying bills on time and avoiding taking on more debt than you can manage. Lenders see potential borrowers with high scores as being less risky than those with lower scores. If you’ve managed credit wisely in the past, you may well do so again in the future.

As a result, lenders may offer borrowers with high scores credit with better terms and lower interest rates. Lenders may also extend credit to borrowers with lower scores. However, to compensate for the extra risk they are taking on, they may charge higher interest rates, which increases the overall cost of borrowing.

Here’s an example of mortgage interest rates for conventional loans by credit score as of mid-2024:

•   Those with a credit score of 760-850 would have a 6.976% APR

•   Those with a credit score of 660-679 would have a 7.589% APR

•   Those with a credit score of 620-639 would have an 8.565% APR

While these differences among rates may not sound huge, over the life of a loan, an additional percent or so in interest can really add up.

Other Factors Mortgage Lenders Consider

In addition to your credit score, lenders will also likely look at some other factors:

•   Your employment status and income. They may want to see that you have a steady stream of cash to pay your monthly mortgage bill.

•   How much money you have for a down payment. The more money you put down, the less risk the lender has to take on. As a result, higher down payments may help you qualify for loans and lower interest rates.

•   Other assets you have that could be used to make debt payments in case you don’t have enough income.

•   The value of any other property you own.

•   Your debt-to-income ratio (DTI). This is a comparison of how much debt you owe versus how much money you have coming in. It’s a quick way to let lenders know whether you have enough income to cover your liabilities.

Can You Get a Mortgage With a Bad Credit Score?

The lowest credit score category is poor, which ranges from 300 to 579. With a score in this range, you may not qualify for a conventional loan.

However, you can get a mortgage with a low credit score as long as it meets minimum score requirements. A government-backed loan may be your best bet, since some lenders may approve a borrower with a credit score below 580 (say, 500 and up). That said, you may pay more in interest than those with higher scores. You might prefer to wait and build your score before applying for a home loan.

How to Build Your Credit Before Getting a Mortgage

It may be worthwhile to build your credit before you apply for a loan. There are several factors that affect your credit score.

One of the best ways to build your credit score can be to always pay your bills on time. This is the number-one factor in determining the most common credit scores, including FICO and VantageScore.

The second biggest factor is your credit utilization rate, or how much of your available credit you’re using. In general, the less the better. Lenders typically prefer that you use no more than 30% of your available credit. Pay down debt to lower your utilization rate and raise your score.

Recommended: How Long Does It Take to Build Credit?

Factors in Mortgage Preapproval

A mortgage preapproval is a statement from a lender that you are likely to qualify for a mortgage. It can be a helpful document to show sellers as it can demonstrate that you are serious about making a purchase and likely to receive financing.

For a preapproval, lenders typically look at such factors as credit score, income, assets, DTI, and employment verification. Thanks to this financial review, being preapproved can give you a sense of confidence about your ability to go house shopping.

Credit Score Tips

Your credit score is not static. It changes over time, and your score may vary depending on the scoring system used.

The credit reporting bureaus update your score after anything happens that affects your credit. So if you are late with a payment or if your credit utilization climbs higher, you may see your score drop. On the other hand, if you were to lower your credit utilization, you might positively impact your score. These actions can all help build your score: paying your bills on time, every time; managing your credit utilization; not applying for too much credit in a short period of time; having a good mix of credit; and maintaining a longer credit history.

It’s also important to monitor your credit score and regularly examine your credit report for errors. (You can check your credit report without paying each week from each of the credit reporting bureaus: Experian®, Equifax®, and TransUnion®.)

If you catch a mistake, dispute the error with the credit reporting bureau immediately to prevent it from dinging your score.

You may be able to build a stronger credit score with the help of healthy financial habits, such as budgeting and saving regularly, which can help you stay out of debt and manage payments. You might use spending apps and money tracker apps in this pursuit. A good place to start: See what your financial institution offers. You can also search online for third-party tools.

Recommended: Why Did My Credit Score Drop After a Dispute?

The Takeaway

Your credit score can impact the type of loans you qualify for, as well as the terms and interest rates lenders may offer. For a conventional home loan, you will typically need a score of 620 or higher, and a score of 700 and up for a jumbo loan. Government-backed loans, such as FHA, VA, and USDA loans, however, may accept credit scores in the 500s. Those with lower scores will typically pay higher interest rates.

While you may qualify for a loan with the minimum required credit score, it may be beneficial to monitor and build your score before taking out a loan to reduce the overall cost of borrowing.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a decent credit score for buying a house?

On average, homebuyers had a credit score of 758 in 2024, but you may be able to qualify for a loan with a lower score. Typically, conventional loans are available to those with scores of 620 and up. Usually, higher scores can give access to more favorable rates and terms.

Can you buy a house with a 600 credit score?

With a credit score of 600, you may be able to qualify for a government backed loan, such as an FHA, VA, or USDA loan. Or you might choose to wait and build your score to 620 or higher, which could then give you access to a conventional home loan.

How much house can I afford if I make $70,000 a year?

There are several rules of thumb about how much to spend on housing each year. One common one is that you shouldn’t spend more than 30% of your gross income each month on housing costs including your mortgage and property taxes. That works out to a mortgage payment of about $1,650 each month. You can then use online mortgage calculators to explore how much you can borrow to fit this monthly budget. In some tight housing markets, people may spend more. In fact, one recent study found that more than 20% of homeowners indeed exceeded this amount.

What credit score is needed to buy a $400,000 house?

Securing a mortgage isn’t just a matter of your credit score versus how much the prospective home costs. Several factors will be evaluated by lenders in addition, such as down payment amount, income, and more. For a conventional loan, you likely need a credit score of 620 or higher, while you may access a government-backed loan with a lower score (say, 500 and above) if you meet certain criteria.

Is a 580 credit score good enough to buy a house?

With a credit score of 580, you may qualify for an FHA, VA, or USDA loan. You can work with online tools and specific lenders to see what your odds of qualifying are or seek out preapproval.

How much income do I need for a 300K FHA loan?

The income you need will vary depending on the lender guidelines and other factors, such as down payment funds you may have available, your credit score, and more. It could be helpful to discuss your qualifications with a lender or use an online calculator to see what you could qualify for.

Photo credit: iStock/angkhan

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