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- There are no specific income requirements to qualify for a mortgage.
- Lenders use your debt-to-income (DTI) ratio to compare income versus your total debt with the mortgage to determine whether you’ll qualify for the loan.
- Your credit score and the size of your down payment also play heavily into whether you'll qualify for the loan, as well as the interest rate you receive.
From conventional to government loans, there are many types of mortgages to suit borrowers with varying credit scores and financial means. While there isn’t a standard baseline income to qualify for a mortgage, you do need to earn enough that you’ll be reasonably able to repay the loan. Here’s how to qualify for a mortgage and how your income can impact the decision.
Are there income requirements for a mortgage?
There is no single, universal income requirement to qualify for a mortgage. It all depends on the amount you need to borrow, current interest rates and the type of loan you’re applying for.
Rather than requiring a specific amount of income, mortgage lenders review your credit and financial information to learn two key points:
- How much mortgage do you qualify for?
- Given your debt and income, can you afford the monthly mortgage payment?
To figure out the answers to these questions, lenders evaluate your debt-to-income (DTI) ratio.
Debt-to-income ratio requirements
Your DTI ratio, also known as the “back-end” ratio, is a measure of gross monthly income against monthly debt payments. To calculate your DTI ratio, simply divide your monthly debt payments by your gross monthly income.
While there’s no minimum income requirement for a mortgage, there are parameters around DTI ratio. These vary by loan type:
- Conforming loans: 36 percent or lower, but can go up to 43 percent with “compensating factors,” like a bigger down payment, higher credit score or adequate reserves
- Jumbo loans: 43 percent or lower
- FHA loans: 43 percent or lower
- VA and USDA loans: 41 percent or lower
What sources of income qualify for a mortgage?
You can use many different sources of income to qualify for a mortgage, including:
- Employment income: Base pay or wages, bonuses, commissions, overtime payments and self-employment income
- Schedule K-1: Income and/or distributions from partnerships, S corporations and estates
- Retirement income: Income from retirement accounts (like a 401(k), IRA, 403(b), etc.) and pension income
- Rental income (including accessory dwelling units or ADUs)
- Disability payments
- Social Security payments
- Dividend or interest income
- Alimony and/or child support
- Trust income
Whichever type of income you have, you’ll need to give your lender documentation to support your claims. Here’s a list of common documents needed for a mortgage.
Other factors that impact mortgage qualification
Beyond your income and DTI ratio, lenders also review your:
- Employment record: Many lenders want to see you’ve had steady employment and income before applying. Requirements vary by lender. Speaking from personal experience, I had trouble applying for a mortgage due to switching jobs two months before applying.
- Credit score: For a conventional loan, you’ll need at least a 620 FICO score. If you don’t qualify, you might consider an FHA loan, which allows scores as low as 580. The higher your score, the better the interest rate lenders will offer you.
- Down payment: For a conventional loan, the down payment requirement can be as low as 3 percent. FHA loans require 3.5 percent, and VA and USDA loans require no down payment. Like your credit score, the higher your down payment, the more likely you’ll be offered a better rate.
Low-income loan options for mortgages
A low income doesn’t have to keep you from buying a house. There are a few ways you can get help buying a house with low income:
- Mortgage assistance programs: Fannie Mae and Freddie Mac offer conventional mortgages with low down payments and homeownership education.
- HFA loans: These are loans offered through state housing finance agencies. They come with low down payment requirements, competitive interest rates and often have closing cost and/or down payment assistance.
- FHA loans: Insured through the Federal Housing Administration, FHA loans have more lenient credit score and DTI ratio requirements than conventional mortgages.
- VA and USDA loans: Both of these government-guaranteed loans have no down payment requirement for those who qualify.
Bottom line on mortgage income requirements
Since there isn’t a specific income required for a mortgage, you don’t need to make a lot of money to buy a house. It’s more about affording the monthly payments based on your loan’s size and interest rate, and how much other debt you have. This will be determined largely by your DTI ratio. Other factors — like your credit score and down payment — will affect whether you qualify and the interest rate you’ll get. Use this calculator to get an idea of how much house you might be able to afford.