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FOUR QUALIFYING PILLARS
Four Pillars to Qualify for a Home Loan
The four pillars that help you qualify for a home loan include income, credit, assets, and collateral.
Income
This is your capacity to pay back the loan.
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Source and type of income (salary, commission, self-employment)
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Length and stability of income
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How long that income is expected to continue in the future
Assets
This is your readily available money and savings.
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Savings and Money Market funds
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Assets or investments that can be converted to cash such as IRAs, 401(k) accounts, stocks, bonds, CDs, etc.
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Cash gifts from family members
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Cash from down payment or closing cost assistance programs, grants or matching funds
Credit
This includes your credit score and report from one or more credit agencies.
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Scores of 580 and above typically qualify you for a home loan.
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Lenders check your credit report to assess your record of paying bills and other debts on time.
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Lenders review of your monthly debts including car payments, student loans, credit card payments, personal loans, child support, alimony and any other debts.
Collateral
This is the value of the home you plan to buy.
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Your home’s value is based on an appraisal.
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Your home is pledged as security against the loan.
