When applying for a home loan, lenders evaluate potential borrowers on a variety of factors in order to determine their creditworthiness. While some of these criteria may seem daunting, having an understanding of what lenders are looking for can help borrowers prepare for the loan application process. Finding the right home purchase broker is an important step in the home buying process.

Credit History: Lenders will review the borrower’s credit history and credit score to get an understanding of their past financial behavior. They will want to see that the borrower has a history of paying bills on time and has a good credit score. 

Income and Employment: Lenders will also need to verify the borrower’s employment status and income. This includes providing pay stubs, tax returns, and other documents to demonstrate that the borrower is employed and has a steady income. Borrowers should also be prepared to provide bank statements and other financial documents to prove that they are capable of making regular mortgage payments. 

Assets: In addition to income, lenders will want to verify that the borrower has enough assets to cover the cost of the home loan. This includes having enough for a down payment, closing costs, and other expenses associated with purchasing a home. The lender will also need to see proof that the borrower has enough money in the bank to cover future mortgage payments. 

Debt-to-Income Ratio: The debt-to-income ratio (DTI) is another important factor that lenders will look at when evaluating home loan applications. This ratio is calculated by dividing total monthly debt payments by gross monthly income.