April 06, 2015

The 4 Cs You Need for a Home Mortgage

Spring Homebuying Series - 4 Cs You Need for a Home Mortgage

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?

Lenders consider the 4 Cs:

  • 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.

To learn more about what it takes to buy a home, read SVP Chris Boyle's Perspectives articles.

Read other posts in our Spring Homebuying series.

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