Tuesday August 16, 2022
Top Qualifications to Keep in Mind When Applying for a Mortgage
Buying a home can be an exciting investment, but it is also possibly the most expensive investment you will make. When looking to finance your purchase you want a mortgage that will set you up for success. Any mortgage lender will consider certain factors to determine whether you qualify for a mortgage loan or not. Here are the top qualifications to keep in mind when applying for a mortgage.
- Credit Score
A lender will check your credit reports to see your past borrowing behavior and payment criteria. A high credit score indicates that you don’t have a habit of borrowing and that you make prompt payments. The minimum credit score for government-backed loans is 580. For a conventional loan, you’ll usually need a credit score of no less than 620.
- Debt-to-Income Ratio
This ratio also comes in handy when lenders are checking if you have a healthy cash flow to qualify for a loan. It is calculated by dividing your total monthly income (gross) by the sum of your total monthly debt payments. The DTI ratio requirements for a conventional loan can go up to 50%, and that of the government-sponsored loans is 43%.
- Down Payment
A down payment is an initial partial payment you make towards purchasing your home. The purpose of this payment is to protect the lender from losing money should you default on your loan payments. For example, if you want to borrow 80%, you must make a 20% down payment.
- Work History
Whether you’re applying for a government-backed or a conventional loan, you’ll be required to give proof of employment. Most lenders want you to have a steady income from your employer or another reliable source.
Finance Your New Home with Our Preferred Lenders
At Landmark 24, we have listed our preferred mortgage lenders who can help you secure the home loan you need to finance your purchase. Contact our preferred lenders today to learn more about their mortgage programs.