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
3 guides in this topic
Loan QualifyingQualifying debt to income ratio explained
Debt-to-Income Ratio (DTI) Explained: How It Affects Your Home Loan approval and even loan type When you're qualifying for a home loan, your credit score gets a lot of attention. B
Read the guide →
Loan Qualifying4 C's of Loan Qualifying
Capacity (debt ratio or DTI), Credit (score & history), Capital (funds for down payment & closing costs) and Collateral (appraised value, type, condition & usage) are the 4Cs of home loan qualifying underwriters review and are explained here.
Read the guide →
Loan QualifyingHow to spot a bad pre-approval letter
Artificial intelligence (AI) is now initially used by many lenders to screen buyers and it's limitations contribute to home buyer's confusion and max sales price…
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.