Whatever the mortgage type your looking for- jumbo, VA mortgage, or reverse mortgage, obtaining financing for your home can be a very complex process. When exploring the many different mortgage options and mortgage rates available, you should be aware of how lenders will review your mortgage application. There are a couple criteria that lending institutions look for when conducting an evaluation.

The first thing lenders check is your ability to pay back the loan. A monthly debt to income ratio is based on your salary, financial assets, and verifiable income over the past two years is what is assessed. Lenders typically desire this ratio to be between 32-36%. The higher your debt to income ratio, the lower your chances are of being approved by a lender for a mortgage.

Another area that lenders look at when reviewing your application is credit rating. The lower your credit score, the lower your chances are for being approved for a mortgage. Lenders also look at your loan-to-value ratio and generally favor borrowers that are prepared to put down a large down payment. It is recommended that a borrower put down as large a down payment he or she can afford as this will reduce the overall size of the mortgage and start the borrower off with a lot of upfront equity. A small down payment makes the borrower more of a risk and they will subsequently be quoted less attractive terms and conditions.


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