(StatePoint) Qualifying for a mortgage can be intimidating. By learning what lenders assess when deciding whether to make a loan, you can take actionable steps now toward homeownership.
While credit history is an essential metric, it’s not the only one at play. There are actually four core factors — the four C’s — that lenders consider: capacity, capital, collateral and credit. Here’s what to know about each one:
kA DEJ=6lQE6IE\2=:8?i46?E6CQmkDEC@?8mr2A24:EJ E@ !2J q24< E96 {@2?k^DEC@?8mk^Am
kAm{6?56CD H2?E E@ >2<6 DFC6 J@F 92G6 E96 >62?D E@ 4@>7@CE23=J E2<6 @? 2 >@CE8286] %@ 5@ D@[ E96J =@@< 2E J@FC :?4@>6[ 6>A=@J>6?E 9:DE@CJ[ D2G:?8D[ >@?E9=J 563E A2J>6?ED 2?5 @E96C 7:?2?4:2= @3=:82E:@?D]k^Am
kAm~?6 @7 E96 H2JD =6?56CD G6C:7J J@FC :?4@>6 :D 3J C6G:6H:?8 D6G6C2= J62CD @7 J@FC 7656C2= :?4@>6 E2I C6EFC?D 2?5 (\aD[ 2=@?8 H:E9 4FCC6?E A2J DEF3D] %96J 6G2=F2E6 J@FC :?4@>6 32D65 @?ik^Am
kAm• %96 D@FC46 2?5 EJA6 @7 :?4@>6 W6]8][ D2=2C:65[ 4@>>:DD:@? @C D6=7\6>A=@J65Xk^Am
kAm• w@H =@?8 J@F’G6 366? C646:G:?8 E96 :?4@>6 2?5 H96E96C :E’D 366? DE23=6k^Am
kAm• w@H =@?8 E92E :?4@>6 :D 6IA64E65 E@ 4@?E:?F6 :?E@ E96 7FEFC6k^Am
kAmr@F?E6C:?8 E92E[ =6?56CD 2=D@ C6G:6H J@FC C64FCC:?8 >@?E9=J 563ED @C =:23:=:E:6D[ DF49 2D 42C A2J>6?ED[ DEF56?E =@2?D[ 4C65:E 42C5 A2J>6?ED[ A6CD@?2= =@2?D[ 49:=5 DFAA@CE 2?5 2=:>@?J]k^Am
kA DEJ=6lQE6IE\2=:8?i46?E6CQmkDEC@?8mr2A:E2=k^DEC@?8mk^Am
kAmp C6G:6H @7 J@FC @G6C2== 42A:E2= :D FD65 E@ 56E6C>:?6 J@FC 23:=:EJ E@ >2<6 >@CE8286 A2J>6?ED] w2G:?8 42D9 C6D6CG6D AC@G6D E92E J@F 42? >2?286 J@FC 7:?2?46D 2?5 E92E J@F 92G6 7F?5D[ :? 255:E:@? E@ J@FC :?4@>6[ E92E J@F 42? 2446DD 72:C=J BF:4<=J]k^Am
kAmr2D9 C6D6CG6D >:89E :?4=F56 D2G:?8D[ >@?6J >2C<6E 7F?5D 2?5 @E96C :?G6DE>6?ED E92E 42? 36 4@?G6CE65 E@ 42D9[ DF49 2D :?5:G:5F2= C6E:C6>6?E 244@F?ED[ 46CE:7:42E6D @7 56A@D:E[ DE@4<D[ 3@?5D @C c_`W<X 244@F?ED] p=@?8 H:E9 42D9 C6D6CG6D[ @E96C 2446AE23=6 D@FC46D @7 42A:E2= >:89E :?4=F56 8:7ED 7C@> 72>:=J >6>36CD[ k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3FJ:?8^5@H?\A2J>6?E\2DD:DE2?46\AC@8C2>DQ C6=lQ?@7@==@HQm5@H? A2J>6?E @C 4=@D:?8 4@DE 2DD:DE2?46k^2m AC@8C2>D[ k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3=@8^9@>63FJ:?8^9@H\5@H?\A2J>6?E\2DD:DE2?46\AC@8C2>D\42?\96=A\J@F\J@FC\7:CDE\9@>6Q C6=lQ?@7@==@HQm8C2?EDk^2m 2?5 DH62E 6BF:EJ]k^Am
kAm{6?56CD >2J 2=D@ =@@< 2E E96 =2DE EH@ >@?E9D @7 DE2E6>6?ED 7@C J@FC 4964<:?8 2?5 D2G:?8D 244@F?ED[ >@?6J >2C<6E 244@F?ED[ @C :?G6DE>6?E 244@F?ED E@ 6G2=F2E6 9@H >F49 42A:E2= J@F 92G6]k^Am
kA DEJ=6lQE6IE\2=:8?i46?E6CQmkDEC@?8mr@==2E6C2=k^DEC@?8mk^Am
kAm{6?56CD 4@?D:56C E96 G2=F6 @7 E96 AC@A6CEJ J@F’C6 A=658:?8 2D D64FC:EJ 282:?DE E96 =@2?] x? E96 42D6 @7 2 >@CE8286[ E96 4@==2E6C2= :D E96 9@>6 J@F’C6 3FJ:?8] x7 J@F 5@?’E A2J J@FC >@CE8286[ E96 >@CE8286 4@>A2?J 4@F=5 E2<6 A@DD6DD:@? @7 J@FC 9@>6] %9:D :D <?@H? 2D 7@C64=@DFC6] %@ 56E6C>:?6 E96 72:C >2C<6E G2=F6 @7 E96 9@>6 J@F’5 =:<6 E@ 3FJ[ J@FC =6?56C H:== @C56C 2? k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3FJ:?8^:?DA64E:?8\2?5\2AAC2:D:?8\J@FC\9@>6Q C6=lQ?@7@==@HQm2AAC2:D2= @7 E96 AC@A6CEJk^2m E92E H:== 4@>A2C6 :ED G2=F6 E@ D:>:=2C 9@>6D :? E96 ?6:893@C9@@5]k^Am
kA DEJ=6lQE6IE\2=:8?i46?E6CQmkDEC@?8mrC65:Ek^DEC@?8mk^Am
kAm{6?56CD 4964< J@FC k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3=@8^7:?2?4:2=\65F42E:@?^H9J\4C65:E\>2EE6CDQ C6=lQ?@7@==@HQm4C65:E D4@C6 2?5 9:DE@CJk^2m E@ 2DD6DD J@FC C64@C5 @7 k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3=@8^7:?2?4:2=\65F42E:@?^:>AC@G6\J@FC\7:?2?4:2=\962=E9\>2?28:?8\563ED\2?5\6IA6?D6DQ C6=lQ?@7@==@HQmA2J:?8 3:==D 2?5 @E96C 563EDk^2m @? E:>6] %9:D 96=AD =6?56CD 82F86 J@FC 7:?2?4:2= DE23:=:EJ 2?5 E9FD J@FC C:D< @7 5672F=E:?8 @? J@FC =@2?] x? 255:E:@?[ J@FC 4C65:E D4@C6 4@F=5 5:4E2E6 J@FC k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3=@8^9@>6@H?6CD9:A^a_`h_ga_\>@CE8286\C2E6DQ C6=lQ?@7@==@HQm:?E6C6DE C2E6k^2m 2?5 9@H >F49 @7 2 k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^3FJ:?8^5@H?\A2J>6?ED\2?5\A>:Q C6=lQ?@7@==@HQm5@H? A2J>6?Ek^2m H:== 36 C6BF:C65]k^Am
kAmuC655:6 |24 E@@=D 42? 96=A J@F 2DD6DD J@FC C625:?6DD E@ 3FJ 2 9@>6 2?5 5:D4@G6C 9@H >F49 J@F >2J BF2=:7J E@ 3@CC@H] ':D:E k2 9C67lQ9EEADi^^>J9@>6]7C655:6>24]4@>^C6D@FC46D^42=4F=2E@CD^9@H\>F49\42?\J@F\3@CC@HQ C6=lQ?@7@==@HQm>J9@>6]7C655:6>24]4@>k^2m E@ 2446DD 2 |@CE8286 p>@F?E r2=4F=2E@C 2?5 @E96C 9@>6 3FJ6C AC6A2C65?6DD C6D@FC46D]k^Am
kAmw2G:?8 2 36EE6C F?56CDE2?5:?8 @7 9@H =6?56CD 6G2=F2E6 A@E6?E:2= =@2? 2AA=:42?ED H:== 8:G6 J@F 2? @AA@CEF?:EJ E@ AC6A2C6 7:?2?4:2==J E@ E2<6 @FE 2 =@2?] xE 42? 2=D@ 96=A J@F ?2G:82E6 E96 AC@46DD H:E9 4@?7:56?46]k^Am
kAm!9@E@ rC65:Ei W4X #:5@7C2?K ^ :$E@4< G:2 v6EEJ x>286D !=FDk^Am
(0) comments
Welcome to the discussion.
Log In
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.