Qualifying for a New Mortgage Loan

Arizona mortgage experts said there are just a few basic standards for applicants to qualify for a home loan.

 •  Down payment: For a Federal Housing Administration loan (FHA), the buyer must have cash for a down payment of 3.5 percent of the home's purchase price. The minimum down payment for a conventional loan is at least 5 percent.

•  Credit score: Most lenders will not approve a buyer whose credit score is lower than 620.

•  "Front-end" ratio: The proposed mortgage payment must be no more than 31 percent of the buyer's gross annual income.

•  "Back-end" ratio: Consumer debt must total no more than 43 percent of the buyer's gross annual income.

•  Two months' payments: After paying all up-front home-purchase costs, the buyer must have at least enough money left in the bank to cover mortgage payments for two months.

•  No late payments: The buyer cannot have made any payments more than 30 days late on credit cards, rent or a mortgage within the past two years.

•  No foreclosure, short sale: The buyer cannot have undergone a home foreclosure or short sale within the past three years for a Federal Housing Administration loan (FHA), or within the past five years for a conventional loan.

Source: AmeriFirst Financial Inc. 8-19-2010