What works in your favor: Your monthly debt payments account for 36 percent or less of pretax income, and you haven't made a major purchase (like a car) recently.
What makes your application more complicated: Your credit cards are maxed out or your monthly debt payments account for more than 36 percent of your pretax income.
Savings and assets
- How much money do you have in the bank? (You will be asked to provide copies of bank statements.)
- How much do you have saved in stocks, bonds, mutual funds and other assets? (You will be asked to provide copies of brokerage statements.)
What works in your favor: You can show that, after closing, you will have at least two months' worth of mortgage payments in the bank.
What makes your application more complicated: You will have little cash in the bank after paying for the down payment and closing costs.
- What is the size of the down payment?
- Where does the down payment money come from -- is it all from your savings, or did some of it come as a gift from family or a grant from a nonprofit? (You will have to document the source of your down payment by providing copies of several months of bank and brokerage statements, and letters from gift-givers and grantmakers.)
What works in your favor: The down payment comes from savings or from equity from a home that you're selling. Even better: The down payment is 20 percent or more.
What makes your application more complicated: You have trouble documenting where your down payment money comes from, or some of the money was a gift or a grant.
- Are you borrowing to buy a home or to refinance the current mortgage?
- If it's a refinance, do you want to take cash out at closing? If so, how much?
What works in your favor: The loan is for a home purchase or a simple rate-and-term refinance, without taking cash out.
What makes your application more complicated: You're getting a cash-out refinance.
Property use and type
- What's the address?
- Do you plan to live in the house year-round, or is it investment or vacation property?
- Is it a house, duplex, condominium or co-op?
What works in your favor: The house is a detached single-family home to be used as a primary residence.
What makes your application more complicated: The property is a duplex or condominium, to be used as a vacation home or to rent out to tenants.
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* "More complicated" doesn't mean "impossible." It means you might have to provide more documentation, the loan decision might take more time and you might have to pay a higher interest rate or higher fees. You might endure more frustration than a borrower with a simpler loan application.