Mortgage Qualification

Mortgage lenders usually take a number of factors into account when attempting to determine the 
creditworthiness of a mortgage applicant. Among these factors are an applicant's:

Income
Outstanding Debt
Credit Score and History
Down Payment

Income: Traditionally, homebuyers have been advised that the sum of the mortgage, property tax , and 
homeowner's insurance should not exceed 25 to 35 percent of an applicant's income, although this idea 
serves as a general guideline and can be dynamic.
 
Outstanding Debt: The ratio of income to debt is an important consideration. Debts such as existing 
mortgage, car payments, loans, and credit card balances are taken into account during the application 
process. There is, of course, a limit to how much total debt that the borrower can assume.

Credit Score and History: A person's credit score may fall within a range of 300-850. The higher the score, 
the better the creditworthiness. Reports can be obtained through 3 credit reporting agencies: Equifax, 
TransUnion, and Experian. Several factors may affect a borrower's credit report, and their history will be 
relevant. Lenders want to know if the applicant pays their bills on time, are subject to any collections, 
judgements or liens, or if they have been involved in any bankruptcies, foreclosures, or reposessions. Any 
mortgage, loan, or credit card defaults would look bad on a potential borrowers' credit history.
 
If a person meets the lender's criteria, they can be prequalified for a mortgage. This means they are 
approved for a certain amount of funding before they even begin to go house shopping.