Mortgage approval can be a lengthy, detailed process.

As you can imagine in today’s environment, lenders scrutinize their mortgage applications, along with a myriad of other documents, in order to determine if borrowers are low-risk and able to repay the loan.

With that said, here are some key factors that all lenders will consider….and make sure to reach out to your chosen mortgage lender to have them walk you though this process:


In order for any lender to make sure that the borrower will be able to repay the loan, they will check the applicant’s income to determine loan eligibility. Essentially, this will help determine if the applicant can afford a home loan and budget for monthly payments.

If the applicant is self-employed or commission based, lenders will evaluate them differently than standard W-2 buyers.  Their income may be considered “unstable” and a more detailed earnings history may be required.

More often than not, the last 2 years of tax returns will tell the income story for these types of borrowers.

Credit Score

An applicant’s good credit score can demonstrate to the lender that they are financially responsible and can qualify for a mortgage, sometimes with significantly lower interest rates.

While a good credit score is a good indication that an applicant can pay off their loan, liens and civil judgments on credit reports can impact scores. Lenders will check with public records to determine if they have any liens or judgments against them that could affect their ability to qualify for a mortgage.

Financial Assets

An applicant must have sufficient assets and collateral they can use for a down payment, if they are purchasing a home. For example, liquid assets like stocks and a savings account can be used to secure higher lines of credit.

Since the property that an applicant purchases will often be used as collateral if they end up foreclosing, the value of the property must match the applied-for loan.

Essentially, lenders are trying to identify these 3 key criteria when it comes to lending to a particular borrower. Today’s rules are determined, for the most part, by the underwriting guidelines of Fannie Mae and Freddie Mac, as the majority of today’s mortgages a sold through these enterprises.