Four questions decide a mortgage file: capacity, credit, capital and collateral. Most delays are one of them missing a document.
Underwriting is not a mood. It is a checklist against program guidelines, and it resolves into four questions. Can you afford the payment. Have you repaid credit as agreed. Do you have the funds to close and something left afterwards. And is the property adequate security for the loan.
Capacity is measured by the debt to income ratio: the proposed housing payment plus your other monthly obligations, divided by gross monthly income. Most programs approve somewhere between 43 and 50 percent depending on compensating factors. Income has to be documented and stable, which is why bonus, overtime and self employment income normally need a two year history before they count.
Credit sets your pricing tier more than it sets your approval odds. The score matters, but so does the pattern behind it: recent late payments, collections, and the age of any major credit event against the program seasoning rules.
Capital covers funds to close plus reserves after closing, measured in months of housing payment. Every large deposit that is not payroll has to be sourced, because an unsourced deposit could be an undisclosed loan. Gift funds are welcome on most programs and need a short, specific paper trail. Tell your loan officer about them at the start, not at the end.
Collateral is the appraisal and the title work. When conditions come back, they almost always fall into one of these four buckets, and the fastest files are the ones that answered each bucket completely the first time. Send whole documents, all pages, including the blank ones.
Illustrative sample figures for a template demonstration. Not a rate quote, not an offer to lend, and not live market data.
