Top Factors That Determine Loan Approval ( What You Want To Know Wednesdays )

The most important factor is debt-to-income (DTI,) which is calculated by taking the total house payment, all long term debt payments, and then expressing that sum as a percentage of the gross monthly income. For a conventional loan, 50% is the maximum value. Some loan programs may allow for a higher DTI.

Your credit score and credit history are also extremely important. There is a golden two year rule, meaning, the most recent two years of your credit history is the bare minimum that Lenders look at to determine your loan approval. You want to make sure that you do not have any past due bills, or late payments. The amount of debt you have also plays a large factor in your credit. Do you have large amounts of credit card debt? Car loan? You will want to consider these factors before seeking loan approval.

Income is a significant factor in determining loan approval. Your Lender will want to make sure you have consistent income and will be able to make your mortgage payments on time and in full.

Your employment history can speak volumes about your stability; consistently switching jobs can raise red flags. However, Lenders do acknowledge that there are several factors that can influence employment.

Don’t be discouraged by any factors you feel like you may not meet; every loan and situation is different, just like people. Mountain West Financial never looks at their clients as numbers, we acknowledge our clients as individuals, and create loans to suit their needs. Contact one of our Loan Professionals today to answer any questions you may have about your dream of homeownership a reality!

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.