No matter how you go about getting a mortgage, all lenders will look into three important areas of your finances to qualify you for a loan. Besides running your credit report, they also want to know your income and assets you have that impact your ability to pay the loan.
1. Credit
Reviewing a borrower’s credit is a key step in qualifying for a mortgage. There are two main components lenders look for.
👉 The first is kinda easy – what debts do you have, what type are they and how much do you owe.
👉 The second is a little more complex and gets into your credit history – are there any past credit events like a late or collection and how long has it been.
The answers to those questions then help determine the best loan program to meet your goals.
2. Income
Knowing what income you can use to buy a home should be easy, right? Just use your before-tax income. Not so fast.
When it comes to income think about it this way.
✅ What you earn
✅ What you report
✅ What mortgage guidelines say we can count
The type of income you earn and for how long affects how much lenders can count for the sake of qualifying you for a mortgage.
So how do you deal with this? Get preapproved early in your process and make sure the lender reviews your income documents so you feel confident in your budget and will be ready when the house you want hits the market.
3. Assets
Finally, lenders will want your bank statements when you’re getting a mortgage. But why? Well, it’s not like they are combing through the documents searching for all those dinner delivery charges and wondering why you want a bigger kitchen.
Are they checking for late-night latte runs or frequent trips to your favorite lunch spot?
Nope – they’re looking for two main things:
👉 That there aren’t any debts that they don’t know about and don’t show up on a credit report.
👉 That you have the money for your down payment and closing costs and that it’s coming from an acceptable source.
Other than that, a lender doesn’t really care. You do you. Just please don’t deposit cash.
Now that you’ve got the 411 on what lenders look for to qualify for a mortgage, let’s start getting you approved for a loan. Follow me today for your mortgage needs.