What is a mortgage?

A mortgage is a loan that you use to buy or refinance a one to four unit single family home. The lender gives you the money to finance the home, and you agree to pay it back over time, plus interest. The home that you buy serves as collateral for the loan, which means that if you don't make your payments, the lender can take your home.

How do I qualify for a mortgage?

Qualification for a mortgage is dependent on several factors

  • Your credit score: Lenders will look at your credit score to determine your risk as a borrower. A good credit score is typically in the 680-760 range.
  • Your debt-to-income ratio: Lenders will also look at your debt-to-income ratio (DTI), which is the percentage of your monthly income that goes towards Qualifying debt payments. A good DTI is typically below 36%.
  • Your down payment: The amount of money you put down as a down payment will also affect your mortgage qualification. A larger down payment will make you a more attractive borrower and may qualify you for a lower interest rate.
  • Your employment history: Lenders will want to see that you have a stable job history and that you are likely to be able to make your mortgage payments on time.
  • Your assets: Lenders will also want to see that you have enough assets to cover your closing costs and other expenses associated with buying a home.

If you meet all of these requirements, you will be considered a qualified borrower and you will be able to apply for a mortgage.

Here are some additional tips for qualifying for a mortgage:

  • Get pre-approved for a mortgage before you start shopping for a home. This will give you an idea of how much you can afford and will make the home buying process go more smoothly.
  • Shop around for the best interest rate. Interest rates can vary from lender to lender, so it is important to compare rates before you choose a lender.
  • Be prepared to provide documentation. Lenders will need to see proof of your income, assets, and employment history.
  • Ask questions. If you have any questions about the mortgage process, be sure to ask your lender.