What Lenders Look At Before They Approve a Home Loan

When you apply for a home loan, a lender looks at four things. They check your credit, your income next to your debts, the cash you have saved, and the type of loan you pick. Each loan program has its own rules, so a talk with a lender is the quickest way to learn where you stand.

Here is what each one means:

• Credit. Your history shows how you have handled debt. A higher score can help you get a lower rate, and over 30 years a small rate change can add up. Check your reports for mistakes early, since fixing one can take time.

• Income and debts. Lenders compare your monthly debt payments with your monthly income before taxes. This is your debt-to-income ratio. Car loan and credit card payments, other loan payments and the new house payment all count.

• Savings. Not every loan needs 20 percent down. Some conventional loans allow as little as 3 percent for qualified buyers. Plan for closing costs, moving costs and an emergency cushion too.

• Loan type. Conventional, FHA, VA, USDA and jumbo loans each set different rules for credit, down payment and income.

USDA loans are worth asking about in Southeast Georgia. Many homes outside the larger towns sit in eligible rural areas, and your lender can check a specific address for you.

While you are buying, keep your credit steady. Hold off on new credit cards, car loans or missed payments until after closing, because big changes can affect your approval late in the process.

Finally, ask your lender what your letter means. Some letters are a quick estimate, while others follow a check of your credit and papers. Neither one is a promise of a loan.

Read the full guide: How to Qualify for a Mortgage: Credit, Income and Down Payment on SoutheastGaRealEstate.com, with more detail, a FAQ and local home searches.

Text FINANCE to 912-420-1663 to get lender resources and buyer-readiness help.

Julie Mock, REALTOR®, Georgia license #430345, Weichert, Realtors® – Webb & Associates, 95 Bel-Air Dr., Statesboro, GA 30461. Call or text 912-420-1663. This article is general information, not legal, tax or lending advice. Brokerage office 912-764-9722. Each Weichert® franchised office is independently owned and operated. Equal Housing Opportunity.