How do lenders qualify borrowers?

Lending institutions look at four factors when considering you for a mortgage.

First - your ability to pay the mortgage. They look at the source (or sources) of your income, and the stability of that income.

Second - the amount of debt you have.

Third - your credit record. It will show your willingness to repay debts. A credit report that's littered with late charges is bad. It suggests that you might not be a good credit risk.

Fourth - the property that will be the security for the mortgage. Is the value of the property high enough in relation to the amount of the loan? Also, can the seller can deliver clear title to the property?

Consider these facts:

1. Qualifying for a mortgage also depends on the amount of cash you have available for the down payment and the closing costs.
2. Debt reduces your borrowing power. A borrower with high income and low debt will qualify for a larger mortgage than a borrower with high income and high debt.

Since a high debt load can keep you from qualifying for the size of mortgage you need, look at ways of reducing your monthly debt payments.

• pay down your debt before you attempt to qualify for a mortgage.


• consolidate your debt into one lower interest rate loan. This could make a big difference if you have high balances on several credit card accounts that charge high interest rates.