Qualification

The analysis of individual borrower to find out if he is eligible for a mortgage. During qualification process, lenders will look at the following factors.

• Credit History
• Assets
• Current Status(own/rent)
• Type of property you want buy, its cost.
• Past loans
• Income
• Employer
• Number of years employed

Qualification Rate

Rate used in initial calculation of mortgage payment. For example Ron is getting a new mortgage. Interest rate that was offered is 6%. Lender will use that rate to calculate Ron’s mortgage payments, making it a qualification rate.

Qualifying Ratios / Qualification Ratio

Ratio used by lenders to calculate total amount that an individual is eligible for.
Debt-to-Income Ratio represents percentage of monthly income that goes towards paying off debt.So if you earn $5000 per month and have mortgage and car payments totaling $2000, your qualifying ratios ratio will be: 2000/5000 * 100 = 40. Meaning that 40% of your income goes towards paying off debt.

Lenders usually do not give out loans that require borrowers to pay more than 36% of their income towards the mortgage.

Qualifying Guidelines / Qualification Requirements

Guidelines used to analyze if a person is eligible for a loan. This includes:

• Credit History
• Assets
• Current Status(own/rent)
• Type of property you want buy, its cost.
• Past loans
• Income
• Employer
• Number of years employed