A Mortgage is a Real Estate loan that you need to apply for. If you’re approved for a mortgage loan, you can borrow a certain amount of money from a lender, which you’ll repay every month over a set number of years. Mortgage approval hinges on several factors:
income
Since you’re going to be paying your lender monthly, they want to make sure you have consistent and adequate income before loaning you a large sum of money. You will need to provide documentation such as W-2s, pay stubs, and previous federal tax returns.
Credit score
our credit score is important as it gives a lender an idea of your financial responsibility and your history of paying back debts. A credit score of 740 or above is very good and will put you in a better position to get approved. A lower score may mean a higher interest rate.
debt to income ratio
Debt-to-income ratio, also known as the DTI ratio is the calculation of your total gross monthly debts or payments divided by your total gross monthly income. The lower the number, the more likely you are to be approved and eligible for a lower interest rate. If your number is on the higher end, you can lower it by either paying off current debt or increasing your income.
