Credit Score & DTI Mortgage Questions

Explore sample Credit Score & DTI questions and educational explanations from the RatesQ team.

• What credit score do I need for a conventional loan?

  I keep seeing different numbers online. Some say 620, some say 640, some say 700+. My current score is 658 and I'm hoping to buy in the next 3-4 months. Where do I actually stand?

  The 620 minimum is the GSE guideline (Fannie/Freddie) but many lenders add overlays requiring 640 or 660. At 658 you're technically eligible for conventional but might face a narrower lender pool. The bigger hit at 658 vs 680 is often in pricing — both the rate and PMI cost will be better at 680+. If you have 3-4 months, try to push to 680.

  At 658 you can get conventional financing, but I'd look at what's dragging the score. If it's high utilization (credit cards above 30% of limit), paying those down can move the needle 20–40 points in a billing cycle or two. Don't close old accounts or open new ones right before applying. Also, get pre-approved now with a few lenders — the pre-approval credit pull has minimal impact, and you'll get real rate quotes based on your actual profile, not generic estimates.

  I went from 642 to 691 in 2 months by paying down 2 credit cards to under 10% utilization. Way faster than I expected. Definitely worth trying.

• What's a good debt-to-income ratio for getting approved?

  My monthly income is $7,500 and my current debts are: car $380, student loans $210, credit cards minimum $95. I want to buy a house around $350k. Am I in range?

  Quick math: on $350k at ~7% rate with 5% down, your PITI would be roughly $2,400-$2,600/month depending on taxes and insurance in your area. Add your existing debts: $380 + $210 + $95 = $685. Total = about $3,085-$3,285. Divided by $7,500 = DTI of ~41-44%. That's within conventional guidelines. You should be in range for pre-approval.

  The quick math looks right. One thing to check: minimum payments on credit cards is what counts, not the balance. And student loans: if any are in deferment/forbearance, some lenders use 0.5-1% of the balance as the qualifying payment if you don't have a documented payment. Make sure your student loan status is clear. At 41-44% DTI with good credit you should qualify for conventional. FHA goes higher but you pay MIP. A lender can pre-qualify you with soft pull credit first to give you a more accurate picture.

• My DTI is 47%. Can I still get approved for a mortgage?

  I ran the numbers and my DTI would be around 47% with the house I want. My credit is 730 and I have $40k in cash after closing. Is this a dealbreaker?

  47% isn't a dealbreaker with 730 credit. Fannie Mae's DU (automated underwriting) regularly approves DTIs up to 50% when the borrower has compensating factors — strong credit, reserves, stable employment history. Your 730 score and $40k remaining after closing are good compensating factors. Apply and see what the AUS (automated underwriting system) says. It's not always predictable from the DTI alone.

  47% DTI with 730 credit and solid reserves has a good chance of getting an approve/eligible from DU on a conventional loan. If it comes back as 'refer,' FHA with its higher DTI tolerance could be a backup. Also worth looking at whether paying down any current debt before applying would drop your DTI below 45% — sometimes eliminating one small debt payment can shift an AUS decision. Your lender should be able to model scenarios before you formally apply.