PATRICK’S QUICK ANSWER
Get your credit and finances in shape before you apply and you will qualify for better terms. Pull your credit reports and dispute errors, keep credit card utilization under 30% and ideally under 10%, and avoid new credit while you are shopping. Most conventional loans want a 620 score and FHA opens at 580. Give yourself 90 to 120 days to clean things up before you apply.
Your credit score and your financial habits decide both whether you qualify and what rate you pay, so a little preparation goes a long way. I have spent over 23 years in loan origination, and the buyers who get the best terms are almost always the ones who clean up their finances before we ever apply. Here is the plan I walk my clients through in San Antonio and across Texas.
This is chapter two of my free Essential First-Time Homebuyer Roadmap.
Pull Your Credit and Read It Early
Do not wait until you are under contract to find out what lenders see. Pull your credit report and your FICO scores several months out so you have time to fix what you can. Disputing a genuine error can lift your score, and that can change your rate.
If you are not sure what a good score looks like for a mortgage, I compare the realistic score ranges for conventional, FHA, VA, and USDA loans in Ask Patrick.
Pay Down Revolving Balances
Your credit utilization, how much of your available credit you use, is one of the fastest ways to move a score. Getting balances down before you apply is a concrete step you can take in a month or two.
The goal is not a perfect score, it is the best score your real history supports before we lock in a rate.
A step-by-step order that works:
1. Dispute any errors on your reports.
2. Pay down credit card balances and keep them low.
3. Do not open new credit or close old cards for several months before applying.
4. Pay every bill on time, every month, with no exceptions.
5. Ask your lender what score range you actually need for the loan you want.
Build Your Down Payment and Reserves
Beyond the down payment, lenders and underwriters like to see that you have reserves and money that is actually yours, meaning it is seasoned and sourced. Move big sums and document them well so there are no questions about where the funds came from.
Texas down payment assistance can genuinely reduce what you bring to closing, so look at that before you assume you need a large down payment saved.
Keep Your Finances Calm During the Process
Between application and closing, I tell every buyer the same thing: no new credit, no big purchases, no changing jobs, no unexplained large deposits. Underwriters recheck your picture right before closing, and a mistake here is one of the most common ways a loan falls apart.
Nerd Alert
The actual numbers and math behind this topic, the way I run them on the channel.
Your credit score is a payment line item, not a sticker. Lenders tier their rate pricing around scores like 660, 680, 700, and 740, and in my experience a buyer in the 660s typically sits a half point higher on rate than a buyer at 740 (an estimate based on current rate sheets, not a promise). On a $236,000 loan that is roughly $80 a month, which is about $9,600 in interest in the first 10 years before you count a dime of principal savings.
- A $5,000 credit card balance at 21% APR costs about $1,050 a year in interest; paying it down helps the score and the debt-to-income ratio at the same time.
- Keep each card's balance under 30% of its limit in the months before you apply; utilization is one of the biggest single score levers.
- Pull all three credit reports at least 90 days before you start. Errors are common and they take time to fix.
For a Texas first-time buyer this is the quiet giant: the same home now costs hundreds a month less at a higher credit tier, and it is the one lever in the whole process you control months before you make an offer. That is the kind of prep work that keeps the numbers on your side.
These are estimates for illustration, not quotes. Figures use publicly available rates and program terms at the time of writing, and your actual rate, fees, and payment depend on your credit file, loan program, and closing date.
