You’d like to buy a home but you’re not sure what mortgage lenders look for in a borrower or whether you could qualify?
Here’s a quick snap shot of the 4 Cs lenders consider:
- Capacity – Your current and future ability to pay back the loan.
- Capital – The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash.
- Collateral – The value of the home that you plan to buy.
- Credit – Your record of paying bills and other debts on time.
What about the down payment – the percentage of the cost of the home that you put down in cash when you buy it? Although 20 percent is something of a magic number, many homebuyers put down much less. Freddie Mac’s new Home Possible AdvantageSM mortgage, for example, is available to qualified borrowers with as little as 3 percent down. And a majority of homes qualify for down payment assistance.
This blog post was originally featured on Freddie Mac’s Blog Post.