A lender goes through a complex matrix when deciding whether or not to approve you for a mortgage. It must look through many pieces of financial data to judge if you are creditworthy. Though you can still get a mortgage if some of the pieces are a bit weak, you do need to have all pieces present.
Your credit score tells a lender how responsible you are about managing your money. The better your score, the better the interest rate you'll get on your mortgage. Typically, a score above 720 will qualify you for the best rates. If your credit score is under 600, you are in the "subprime" category and it may be more difficult for you to get a mortgage -- if you do, you'll pay higher interest rates. Bankrate.com states that 500 or 520 is the lowest score you can have and still qualify for a mortgage.
The amount of your down payment shows the lender how much you are able to put into the house. Twenty percent of the home's value will put you on solid footing, but it's possible to get a loan with less than that; however, in that case you will likely have to pay for private mortgage insurance.
Ability to Pay
Your income and the amount of debt that you're currently paying back affect your ability to get a loan. Most likely, the lender will want the cost of your mortgage -- including taxes and insurance -- along with your debt payments to be less than 30 percent of your income.
A solid employment history shows the lender that you are responsible. It can help when you have a low credit score due to lack of history. Lenders will likely ask for at least a month's worth of pay stubs. If you are self-employed, be prepared to prove your income going back two years.
The lender is investing in your home as well and wants to make sure that it's worth what its lending you. The house needs to appraise for at least the amount of your mortgage and down payment.