Buying a home is a major milestone. But before you get the keys, you’ll need to clear one big hurdle, qualifying for a mortgage. Lenders in California look at several things when deciding if you’re eligible for a home loan. Understanding these factors can help you get approved faster and maybe even secure better terms.

Here’s what really matters.

1. Your Credit Score Matters, A Lot

Your credit score tells lenders how responsible you are with borrowed money. If it’s on the higher side (think 740 or above), you’ll have more loan options and possibly a lower interest rate. Scores in the 600s might still get you approved, but expect tighter terms and more scrutiny.

Pro tip: Before applying, check your credit report. Fix any errors and pay down debt to give your score a boost.

2. Stable Income Is Key

Lenders need to know you can pay them back. A steady job history, preferably with the same employer for at least two years, shows financial stability. Self-employed? You’ll likely need to show two years of tax returns instead.

They’ll also consider your income source. Whether it’s hourly, salaried, or commission-based, it should be reliable and consistent.

3. Debt-to-Income Ratio (DTI) Can Make or Break Your Application

Your DTI ratio is the percentage of your monthly income that goes toward debt. This includes car payments, student loans, credit cards, and your future mortgage. A lower ratio (under 36%) shows you’re not stretched too thin. Some lenders might approve you with a higher DTI, but that’s not a guarantee.

Try paying off small debts before applying for a loan, it can make a big difference.

4. Down Payment Size Affects Approval and Interest Rates

While there are programs that allow for low down payments, putting more money down often works in your favor. It shows lenders you’re financially invested and reduces their risk. A 20% down payment is ideal, but many buyers in California still qualify with less.

Just remember: if you put down less than 20%, you may need to pay private mortgage insurance (PMI).

5. The Type of Property You’re Buying

Not all properties are created equal, at least not in the eyes of a lender. A single-family home is considered less risky than a condo or multi-unit property. If you’re looking at a fixer-upper, expect the loan process to be more complicated. That’s because the property needs to meet certain condition standards.

For home loans in California, especially in competitive markets like Los Angeles or San Francisco, a clean, move-in-ready property often moves the loan process along more quickly.

6. Loan Type and Program You Choose

From conventional loans to FHA, VA, and USDA loans, the program you apply for can influence your eligibility. Each comes with its own rules, credit score minimums, and down payment requirements.

For example, VA loans offer great terms but are limited to eligible veterans and service members. FHA loans are easier to qualify for but often come with higher insurance costs.

7. Your Savings and Assets

Lenders don’t just want to see that you have enough for a down payment. They also want to know you’ve got some cash left over, called “reserves”, after closing. This reassures them you won’t default if an emergency comes up.

Savings accounts, retirement funds, and even investment accounts can all help paint a picture of financial security.

8. Local Market Conditions

Believe it or not, where you’re buying can also impact your loan process. Home loans in California are often subject to higher scrutiny because property values are steep. Lenders want to be sure the property is worth what you’re paying. Appraisals matter more here than in other states with lower median home prices.

Final Thoughts

Securing a mortgage doesn’t have to be stressful. The more prepared you are, credit in shape, stable job, savings in place, the smoother it’ll go. If you’re unsure where you stand, speak with a loan advisor early. They can help you make the right moves before you even apply.

Understanding these key factors can put you in a much stronger position to qualify for home loans in California. And once that approval comes through, you'll be one step closer to making that dream home a reality.