How Lenders Evaluate You

To prequalify you, South Park Mortgage starts with three main factors:

1. We use a debt-to-income (DTI) ratio which tells them what percentage of your income will be going towards all of your bills. They will let you spend as much as 43 percent of your income on housing and non-housing bills.  Sometimes that rate can be closer to 50.

2. We will run your credit report from all three credit bureaus — Equifax, TransUnion, and Experian — and base your loan approval on the middle of your three scores. In addition to scores, the reports lenders pull will also show them your full credit history which we also consider. If you run your own credit scores, we won’t use them — we must use their own, and the reports we pull will most likely produce different scores than you’re able to obtain as a consumer.

3. Lenders consider down payment and how much money you’ll have left over after you close a home purchase — they review this against the DTI to consider how fast you’ll be able to build up reserves. Sometimes you can put down as little as 1%. Some loans don’t require money left over after close. But even in situations like this, you should consider whether you want to own a home with no reserves.