Home Loans

Here are the factors that count the most.

Income: Generally, lenders look for two years of stable income based off of your gross monthly income (pay before taxes).

Debts: Installment debt (car payments, credit card payments, personal lines of credit, etc.) are added together with your proposed mortgage payment to determine your ability to qualify for the loan.

Employment History: “Stability” is the key word here. In this case, they want to make sure you’re able to make your loan payment every month for years to come.

Credit History: Numerous late payments on debt, or a credit report that indicates a lack of ability to use credit wisely are red flags for a lender.

Property: In this case, the lender wants to make sure that the value of the property would more than cover the loan amount if it had to be sold following foreclosure. Note that the appraised value and the purchase price may not always match.

To apply for a home loan, you'll likely need:

• Paycheck stubs
• W-2s
• Copy of the purchase and sale agreement
• Proof of other income
• Outstanding loans
• Rental or landlord information
• Employer's name and address
• Past bank and brokerage statements
• Your past home address

Putting 20% down is often ideal for more financially established buyers or those with a larger cash or savings reserve.

Benefits of a larger down payment includes:

• A smaller monthly mortgage payment
• More equity in case you need to move and sell
• No private mortgage insurance
• Less risk when selling

For those who would like to put less than 20%, many lenders offer loans that require a smaller down payment. Here are some benefits to putting less than 20% down:

• More cash on reserve for emergencies
• Likely to become a homeowner faster, since you won't have to save as much cash
• Greater financial cushion for your lifestyle