Typical Mortgage Lending Requirements
Mortgage lending companies have certain requirements that home buyers must meet to qualify for home loans. Lenders need loan applicants to supply them with certain documentation and facts regarding their employment and past credit history to give them loans. Knowing what your lender needs to qualify you for a home loan in advance can speed up the mortgage-lending process.
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Pay Stubs
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Your lender needs proof you are employed, so supply the company with recent pay stubs from your employer. The lender also needs to know how long you have been at your job and your employment history. A lender prefers a stable and secure job history.
W-2 and Tax Returns
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Lenders want to see the past two or three years of W-2's and tax returns. These records show how much income you earned in previous years.
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Bank Statements and Other Assets
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Your lender needs to know your total assets, including stocks, mutual funds, bank account records and properties you may own.
Debt
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Your lender needs to know about any debts you owe. These debts would include credit card debt, vehicle loans and personal loans. The lender sees how much debt you already owe and how much more you are able to take on with a mortgage loan.
Credit History
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Your lender needs to know your credit history to determine if you are a good credit risk. The company will order your credit history from one of the credit bureaus in the United States, such as Experian or Trans Union. The credit history shows your payment history including all loan payments and utility bill payments. The lender is also supplied with a credit score, which helps determine your eligibility for a mortgage loan.
Debt-to-Income Ratio
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Lenders determine your debt-to-income ratio by comparing the amount of debt you have with the amount of income you bring home each month. Lenders do not want to see you strapped with huge payments that you may not be able to pay, so they base the amount of the loan on what you can comfortably afford each month. The less debt you have when applying for a loan, the more the lender may allow you to take out on a home loan.
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