General Loan Qualifying Requirements

Immediately below, please find a bulleted list that highlights the typical loan qualifying criteria. Please keep in mind that there are exceptions and compensating factors to make up for some of them. For instance, significant assets can offset a high debt-to-income ratio.

•· 2 year employment history in the same line of work with no major job gaps. A major job gap is defined as greater than 30 days. However, if a borrower just received a degree and started work in the same field of study, you can use the school history to complete the required two years. If someone is just shy of two years, an underwriter can give an exception for strong FICos, low DTI or solid assets. Or, if a person is laid off or takes maternity leave, an underwriter will typically accept those reasons to not require a 2 year history.

•· 2 years of W2s or tax returns if the person is self-employed. If a borrower owns more than 25% of a business, full business returns will also be required.

•· 2 most recent pay stubs covering at least a 30 day period and reflecting year-to-date earnings

•· 2 most recent year's Schedule E's and first two pages of the 1040 on the tax returns, if the borrower owns rental properties. Rental income will be calculated off of Schedule E compared to executed leases as in year's past.

•· 2 months of liquid assets (checking, savings, stocks, bonds, IRAs, 401k, retirement) to show proof of down payment, closing costs and 6 months worth of mortgage payments. For the latter three accounts, 70% of the value will be used to offset selling and early withdrawal costs. All pages of financial statements are required, even if they are blank.

•· Credit score above 680 is ideal. Lower scores can still secure financing; however, the rate and LTVs will be restricted, as will the mortgage insurance availability.

•· Debt-to-income ratio of at least 50% or below (please see blog topic ‘How to Calculate Debt-to-Income Ratio)

Again, there are exceptions to the above, so if a borrower has specific questions about their situation, they should speak with an experienced mortgage professional directly. Additionally, guidelines are changing on a daily basis, so the above criteria can change with little or no advanced notice.