Components Of Mortgage Qualification

Components Of Mortgage Qualification

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Everyone knows that you need to have a strong credit score if you want to get a loan in today's lending environment. But what other things can impact your ability to qualify? Things like your debt level, employment history, assets and citizenship all play a key role. Let's take a look at how these things impact loan qualification.

Your debt to income ratio plays a key role in mortgage qualification. This is the ratio that measures how much income you have coming in versus what you have going out each month. While lenders have different criteria, a good rule of thumb is that your housing expense should be no more than 29% of your income. Additionally, your total proposed debt should be no more than 41% of your income.

Income is not all that counts. Mortgage lenders want to see stability in your employment history. Ideally, you want to have at least two years with the same employer. If you have made job changes, it works to your benefit if they are in the same line of work and resulted in an increase in income. This shows you are advancing in your career. Any gaps in your employment history can hurt your ability to get a mortgage.

Having both savings and checking accounts works in your favor. Ideally, you want to have a healthy balance in both! Having significant assets and liquidity can go a long way to help you qualify for a mortgage. Your two most recent bank statements will need to be given to the mortgage underwriter. Make sure that they are clean and don't have any checks that were returned for insufficient funds!

Not being a United States citizen can hurt your ability to purchase a home. While it was once fairly easy for non-citizens to get a mortgage, it has become almost impossible. Increasing defaults have lead lenders to shy away from these types of loans.

Hopefully you now see that there is more to getting a mortgage than just credit. Just about every one needs to try to improve their credit prior to applying for a home loan. But, that is not the only thing you should pay attention to. Having a stable work history, good assets and a low debt to income ratio also play an important role in qualifying. Now you should have an idea of what you will need to focus on to get a mortgage loan.

About the Author:
Vincent Polisi is the founder of financethedream.com, the nation's premier rent to own program. To see rent to own homes listings, please visit us on the web.



Article Originally Published On: http://www.articlesnatch.com


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