The three factors lenders use to determine your loan eligibility.
Qualifying for a home loan is not as simple as walking into the bank and saying you want to buy a house. Here are the three major factors that lenders use to determine if you can qualify for a loan and how large of a loan you can get:
1. Credit. We can approve buyers with credit scores all the way down to 550, but their loans won’t have the best interest rates.
2. Debt-to-income ratio. This ratio shows how much money you’re bringing in versus the amount of debt that you have, including credit cards, car loans, student loans, and the new mortgage payment. You typically want to keep your debt-to-income ratio below 45% of your income.
3. Assets. We look at your checking account, savings account, 401(k), stocks and bonds, crypto, and life policies that have a cash value. We use your assets to determine your down payment amount. There are many different options to help cover your down payment.
If you have any questions about qualifying for a loan, don’t hesitate to reach out to us by phone or email. We look forward to hearing from you.
