What do lenders look at when considering a loan for approval?
Lenders will consider a variety of factors when determining whether to approve you for a loan. The first consideration is your ability to make payments. To establish your ability to afford the loan amount, the lender will look at your average housing expenses and weigh it against your net monthly income. Your housing expenses include the loan’s monthly payment, as well as insurance costs, property taxes and any homeowner’s association fees paid to the community. Additional considerations include your total debt, meaning any credit card balances, child support, alimony payments, tuition, car loans or any other payments you are required to make in installments over the course of more than 10 years. To qualify for a loan, your monthly mortgage payment ideally should be less than 28 percent of your net monthly income. That said, lenders will sometimes make concessions for first time buyers, as they will typically have a smaller down payment amount available and therefore higher monthly pay
