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Behind the Loan: How Lenders Qualify Borrowers
Securing a loan can feel like a daunting process, but the criteria lenders use to evaluate borrowers are actually quite transparent. At its core, the lending process is about assessing risk: lenders want assurance that you can, and will, repay the borrowed money.
This lesson breaks down the key factors lenders examine, often referred to as the “Cs” of credit: Character, Capacity, Capital, Collateral, and Conditions. Understanding these pillars will help you position yourself as a strong, qualified borrower.
✅ 1. Credit Score
- What Is a Tri-Merge Credit Report?
- How Credit Scores Impact Interest Rates
- How Credit Scores Affect Qualification
✅ 2. Debt-To-Income (DTI)
- How DTI Is Calculated
- Maximum DTI Ratios by Loan Type
- How DTI Affects Loan Approval
✅ 3. Borrowers & Co-Borrowers
- Who Qualifies as a Co-Borrower
- How Income & Credit Are Combined
- Impact on Loan Eligibility
✅ 4. Marital Status
- Why Lenders Ask About Marital Status
- Community Property State Rules
- How Spouses Affect Loan Qualification
✅ 5. Citizens or Non-Citizens
- Documentation Required for Each Status
- Visa Types That Qualify
- How Residency Impacts Loan Options
✅ 6. Purpose of Purchase or Refinance
- Purchase vs Refinance: Key Differences
- Rate-Term vs Cash-Out Refi
- How Loan Purpose Impacts Eligibility
✅ 7. Subject Property
- What Counts as the Subject Property
- Key Data Needed for Loan Approval
- How Property Type Affects Qualification
✅ 8. Type of Property — SFR, 4-Units, Commercial
- Residential vs Multi-Unit vs Commercial
- How Property Type Impacts Financing
- Special Guidelines for 2-4 Units
✅ 9. Occupancy — Owner or Non-Owner
- Primary, Second Home, or Investment
- Occupancy Documentation Requirements
- Impact on Rates & Down Payment
✅ 10. Real Estate Schedule — Multiple Properties
- How to Document Additional Properties
- Rental Income vs Liabilities
- Cash Flow Analysis for Investors
✅ 11. Employment — Salary or Wages
- Required Employment Documentation
- Verifying Stability & Work History
- How Underwriters Assess Income
✅ 12. Self-Employment / Business Owner
- Understanding Self-Employed Guidelines
- Required Tax Returns & P&Ls
- How Business Structure Impacts Approval
✅ 13. Income — Salary & Wages
- Types of Acceptable Income
- Calculating Qualified Monthly Income
- How Variable Pay Is Counted
✅ 14. Business Income
- Net Income vs Gross Income
- Add-Backs & Adjustments for Approval
- Analyzing Cash Flow & Business Stability
✅ 15. Assets & Sources of Funds
- Acceptable Asset Types
- Documenting Down Payment & Closing Costs
- Large Deposit & Sourcing Requirements
✅ 16. Liabilities
- What Counts as a Liability
- Student Loans, Auto Loans, Credit Cards
- How Liabilities Impact DTI
✅ 17. Loan Amount — Conforming or Jumbo
- Conforming vs Jumbo Loan Limits
- Key Qualification Differences
- Impact on Rates & Requirements
✅ 18. Loan-To-Value (LTV) & Combined Loan-To-Value (CLTV)
- How LTV & CLTV Are Calculated
- Maximum LTV by Loan Program
- How LTV Impacts Down Payment & PMI
✅ 19. Loan Term — 15, 30, 40 Years
- Monthly Payment Differences
- How Loan Term Impacts Interest
- Choosing the Best Term for the Borrower
✅ 20. Loan Products — Conventional, Jumbo, FHA, VA
- Key Differences Between Each Program
- Minimum Down Payment & Credit Requirements
- When Each Product Is the Best Fit
✅ 21. Loan Programs & Interest Rates — Fixed, ARM, Hybrid
- Fixed vs Adjustable Explained
- Hybrid ARM Benefits & Risks
- Choosing the Right Rate Program
✅ 22. Title
- What Title Insurance Covers
- Chain of Ownership & Title Search
- Common Title Issues to Avoid
✅ 23. Escrow
- What the Escrow Process Includes
- Escrow Impounds: Taxes & Insurance
- How Escrow Protects Buyer & Seller
✅ 24. Appraisal
- What an Appraisal Measures
- How Value Affects Loan Approval
- Appraisal Adjustments & Reconsiderations
Course Content
How to Qualify Borrowers Video
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