When it comes to getting approved for a home loan, most people assume that your credit score is the only thing that matters. While your credit score does play a major role in the mortgage approval process, it's just one piece of a much bigger puzzle.
In fact, mortgage lenders look at several factors to determine whether you qualify for a loan—and how favorable your terms will be. If you’re preparing to buy a home, here’s what lenders consider beyond your credit score.
One of the most important metrics lenders evaluate is your debt-to-income ratio. This measures how much of your monthly income goes toward debt payments—like credit cards, car loans, student loans, and other obligations.
💡 Why It Matters: A lower DTI signals that you have more room in your budget to comfortably handle a mortgage payment.
Most lenders prefer a DTI below 43%, though some loan programs allow for higher ratios with compensating factors like a larger down payment or excellent cash reserves.
Pro Tip: Pay down existing debts and avoid taking on new ones before applying for a mortgage.
Lenders want to know you have stable and reliable income. They’ll review your employment history, typically looking for at least two years of consistent work in the same field.
💡 Why It Matters: A stable income stream means less risk for the lender, which can make you a more attractive borrower.
You’ll likely be asked to provide:
Having money in the bank doesn’t just help with your down payment—it also shows lenders you’re financially responsible and have a cushion in case of emergencies.
Lenders will look at:
💡 Why It Matters: More assets = more financial security = less risk to the lender.
The size of your down payment can impact both your loan approval and the terms of your mortgage. A larger down payment typically lowers your loan-to-value ratio (LTV), which can lead to better interest rates and lower mortgage insurance costs.
💡 Why It Matters: Putting more money down reduces the lender’s risk and shows your commitment to the purchase.
While many homebuyers aim for 20% down, there are loan options that require as little as 3%—and even 0% for qualified VA and USDA buyers.
The type of home you’re buying and its appraised value also play a role in your loan approval. Lenders want to ensure the property is worth what you're paying for it—and that it meets certain condition standards.
💡 Why It Matters: The property itself serves as collateral for your mortgage.
Different loan programs have different rules about property types, such as condos, multi-family homes, and manufactured housing.
Even if your credit score is decent, lenders will look closely at your actual credit report. They want to see how reliably you’ve made payments in the past, especially on housing-related accounts.
They’ll also review:
💡 Why It Matters: Responsible credit behavior = stronger borrower profile.
Getting a mortgage is about more than just a number. Lenders want to see that you're financially stable, responsible, and ready to take on the commitment of homeownership. By understanding what lenders are really looking for—and taking steps to strengthen all areas of your financial profile—you’ll set yourself up for a smoother approval process and better loan options.
Whether you're a first-time buyer, a returning homeowner, or an investor, I’m here to help you navigate the process with confidence and clarity. Let's look at your full financial picture and find the loan that’s right for you.
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Connect with Caroline Shook from CMS Mortgages, a licensed mortgage broker, for expert mortgage advice and services.
