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Criteria Lenders Use
Spoiler alert: It’s not how many throw pillows you own.
Here’s what really matters—and what you can do to shine:
Assets and Savings
Think of this as your financial safety net. Lenders need to see that you not only have the funds for your down payment and closing costs, but also some cushion left over—known as reserves. Depending on the loan program and your risk profile, lenders may want to see anywhere from two months to six months of mortgage payments saved in your account. More is always better, and no, Venmo does not count as proof of assets. The good news? You can ace this with a little preparation and a lot of transparency. Lenders look at a handful of key factors, and while each one carries its own weight, the overall picture is what truly counts. Strengthen these areas, and you not only improve your chances of approval—you open the door to better rates, more loan options, and potentially lower monthly payments. It is like getting upgraded to first class without paying extra.
A Low credit Score Isn't All Bad
Your credit score is like your financial GPA. Lenders love to see scores of 700 and up, but government-backed loans like FHA may accept scores as low as 580 with a sufficient down payment. A strong score can lead to lower interest rates, which could save you thousands over the life of your loan. Want to boost your score? Pay bills on time, keep credit balances low, and avoid opening new accounts during the loan process.
Income and Employment Stability
Lenders want to know you have a steady stream of income. That usually means two years of consistent employment or income history in the same line of work. If you are self employed, you will need to show two years of tax returns or qualify through alternate documentation such as bank statements. Changing jobs is not a deal breaker, but switching careers mid mortgage process? Probably not the best idea.
The Bottom Line
When you apply for a mortgage, lenders aren’t just handing out money because you asked nicely (although a good attitude never hurts). They are required—by both state laws and federal regulations—to carefully evaluate your financial picture before approving a home loan. Think of it as a financial background check, where lenders play detective to make sure you’re a good investment.
Lenders do not expect perfection, but they do expect preparation. Your financial profile helps them decide how much you can borrow, what programs you qualify for, and what rate you receive. Whether you are going for a conventional loan, FHA, VA, USDA, or one of our creative solutions for self employed borrowers, we will guide you in making the strongest case possible.
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Premier Point Mortgage
NMLS #2184348
Discover leading properties and secure your dream home with us. Expert guidance and support at every step.
990 Raritan Rd. Clark, NJ 07066
Legal Statements
Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.
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