Home loans have become the easiest options in order to buy a property. You will find a large number of financial institutions, banks, credit unions, etc., offering home loans or mortgages to consumers who meet all the required criteria. As the economy suffered one of the worst crises in the recent times, the lenders have become stringent enough while considering a person for a mortgage or home loans. Financial institutions like Heritage Home Loans, Chase, Bank of America, etc., take special care in checking whether or not the borrower meets all the required criteria.
Here are some of the eligibility criteria which one needs to meet in order to get qualified for a home loan.
Credit Score: This is one of the major criteria which the borrowers need to fulfil in order to get a home loan. In order to get a conventional mortgage, one needs to have a credit score of more than 700. On the other hand, FHA, USDA and VA loans require a low score of 600-620. If you don’t meet this criteria, most lenders may not even consider your loan application.
Down payment: Most of the loan types available in the market require you to provide with a down payment. You should have a down payment of 3.5% - 5% minimum in order to get qualified for a FHA loan. In case of conventional loans, the required down payment is 20%. In case of conventional loans, if you don’t have the required down payment, then you can go for private mortgage insurance (PMI).
Employment: This is another important criterion which you need to meet in order to get qualified for a home loan. Unless you can show a stable employment for 2 years or above, you won’t be able to get a mortgage. Any gap in employment will also lower your chances to get qualified for a mortgage. Apart from this, you will have to show your recent pay stubs to the lender.
Savings: You will have to show that you have at least 3-4 months of mortgage payments as your savings in your checking account. This will give a guarantee to the lender, that you will be able to make the payments even if you lose your job in the recent future.
Debt to income ratio: This is another criterion which all the lenders will check when you apply for a mortgage. Well, it should be noted here that your DTI is expressed as a percentage. Thus, it is a ratio. It is your total "minimum" monthly debt divided by your gross monthly income. Conventional loans require a DTI ratio of 28/36. FHA loan requirement is 31/43.
Hope now you know all the major requirements in order to get qualified for a mortgage. If you meet the required criteria, then you can contact Heritage Home Loans, Chase, Bank of America, etc., and apply for a loan.