How to Know If You Might Qualify for a Loan

Thinking about buying a home or taking out a loan, but not sure if you’ll qualify? While the official approval comes from your lender, there are a few key indicators that can give you a pretty good idea of where you stand before you even apply.

Here are three common signs that you may be in a strong position to qualify for a loan:

1️⃣ You Have a Good Credit Score

Your credit score is one of the first things lenders will look at when reviewing your loan application. A good score typically means you’ve been responsible with credit in the past—making payments on time, keeping balances low, and avoiding too many hard inquiries. The higher your score, the better your chances of qualifying (and getting a lower interest rate too!).

Tip: Most conventional loans prefer a score of 620 or higher, but there are options for lower scores depending on the type of loan and your other financial factors.

2️⃣ You Have a Steady Income and Employment History

Lenders want to know you have a stable source of income and a consistent employment record. This shows that you're capable of making regular, on-time payments on your loan. If you've been at your current job for at least two years and can show reliable pay stubs or tax returns, that’s a great sign.

Bonus: Having additional income sources (like freelance work, rental income, or a spouse’s income) can also strengthen your application.

3️⃣ Your Debt-to-Income Ratio (DTI) is Low

One of the most important numbers in the mortgage approval process is your debt-to-income ratio, or DTI. This measures how much of your monthly income goes toward debt payments—like credit cards, car loans, and student loans—compared to how much you earn.

So, why is DTI so important?

Lenders use DTI to determine whether you can comfortably take on more debt. If your DTI is too high, it may suggest that you’re financially stretched, making you a higher risk for lenders. Most lenders look for a DTI below 43%, though some loan types may accept higher or lower limits depending on your full financial picture.

Let’s Recap:

✅ Good credit score
✅ Steady income & job history
✅ Manageable debt-to-income ratio

These three factors are great signs that you may be ready to take the next step toward homeownership—or qualify for a personal loan.

Ready to Explore Your Options?

It’s always a smart idea to speak with a trusted lender to go over your unique financial situation and see what loan options you qualify for. If you’re not quite there yet, don’t worry—many lenders can help you create a plan to get "loan ready."

📩 Have questions? I’d be happy to connect you with a knowledgeable and trusted lender who can walk you through the process. Reach out anytime!