These financial factors also influence how much they are willing to lend borrowers. When qualifying for a mortgage, lenders rely on standard indicators that determine whether a borrower can repay a loan. Major Factors that Influence Mortgage Eligibility This is why it holds more weight when it comes to securing a mortgage deal. While pre-qualifying allows you to assess your readiness for a mortgage, pre-approval is a conditional commitment from a lender to officially offer you a loan. Pre-approved homebuyers are perceived to offer more financial reliability than pre-qualified ones. If you do not secure an offer within that time, you must reapply to get a pre-approval letter again. But take note: Pre-approval letters are only valid for 60 to 90 days. Sellers also request for a pre-approval letter once you’re ready to make a deal. Consumers who obtain pre-approval are perceived as more serious homebuyers. Once you receive a pre-approval letter, a lender approves a specific amount and includes a possible interest rate. It’s also a plus if you can show a large amount of cash reserves and pay a high down payment. But once your lender sees your income is high and sustainable enough, you can get approved. Lenders are concerned with the viability of your business and whether you can sustain monthly mortgage payments. You need to prove you have a reliable income source. In general, obtaining a mortgage when you’re self-employed can be more challenging. Furthermore, expect lenders to perform a hard credit check on your credit report, which means it can impact your credit score.įor those who are self-employed, lenders confirm your income by reviewing tax return transcripts from the IRS. Though most lenders only ask for a verbal confirmation, others might request for an email verification. They request for income information and other related credentials. Lenders verify your income and employment by directly contacting your employer.
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