Income
This is your capacity to pay back the loan.
- Source and type of income (salary, commission, self-employment)
- Length and stability of income
- How long that income is expected to continue in the future
Assets
Available money to cover the down payment, closing cost and reserves.
- Liquid money available in Checking, Savings and Money Market funds
- Investments that can be converted to cash (Socks, Bonds, CD, IRA, 401k, etc)
- Cash gifts from family members
Credit
Credit is a major factor in determining your qualifying rate.
- Your qualifying credit score is determined through Experian, Equifax and Trans Union by your history of obtaining debt and the capacity to pay it back.
- Lenders access your credit report to verify the history of paying debts back on time.
- Lenders access your credit report to calculate monthly obligations (car payments, student loans, credit card minimum payments, personal loans, etc).
Collateral
The asset a lender secures for a loan.
- Your home is pledged as collateral against the loan.
- The home’s value determines the how much you can borrower and is determined by a licensed appraisal management company.