Learning center
Loan Qualifying
4 C's of loan qualifying & underwriting explained -- CREDIT, CAPITAL, COLLATERAL and CAPACITY
Overview
Loan underwriting is based on the 4 C's, credit, capital, collateral, and capacity. Your qualifying criteria must fall into an acceptable range based on the written guidelines of your chosen loan program. Automated underwriting (AUS) is used to determine this on most loan files with a human underwriter interpreting the AUS decision. Knowing which loan program will allow for loan approval and/or be the most beneficial for your situation is an expertise that takes decades and literally thousands of closed loans for a loan officer to master.
Who this is for: buyers and homeowners looking to refi
What you'll learn
- •CREDIT -credit score & any serious derogatory credit like BK, Foreclosure and others
- •CAPITAL -verifiable funds to close for downpayment and closing costs
- •COLLATERAL -appraised value, property type & property condition
- •CAPACITY -debt ratio which is comparing qualifying income to monthly mortgage payment & other credit related debts
4 guides in this topic
First Time BuyerWhat Documents Are Needed For a Mortgage
Requirements by Loan Type. The paperwork required depends on your loan program, how you earn your income, and your financial situation. Conventional, FHA, VA, and USDA loans share many of the same requirements, but there are some important differences.
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Loan QualifyingDTI, debt to income ratio explained
DTI compares your qualifying monthly debts with your gross qualifying monthly income. While the basic calculation is simple, mortgage guidelines determine exactly which debts and income can be used.
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Loan Qualifying4 C's of Loan Qualifying
Getting a mortgage approved involves much more than having a good credit score and enough money for a down payment. Mortgage underwriters evaluate four major areas when determining whether a borrower and property meet loan guidelines. These are commonly known as the 4 C’s of mortgage underwriting:
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Loan QualifyingWhat docs are needed for your home loan?
What Documents Do You Need to Get a Home Loan? Getting a home loan requires paperwork—but there’s a reason behind almost every document your lender requests. Mortgage lenders gener
Read the guide →Get a straight answer today
No credit pull to start, no sales pressure, and a real quote you can compare line by line against any bank or big lender.