What are the requirements for a bank loan ?

Question

What do I need for a bank to approve a loan?

Elise Marquette · Answer

Depends on what kind of loan.. I am assuming you're talking about a mortgage right? Banks do all kinds of loans.

For pretty much any loan, the bank is going to want to know that you have a way to pay the loan back, whether it be from the anticipated rental income from the property or from you job. Typically banks also want to see a credit score over 620. The down payment requirement will vary depending on what kind of property you're trying to buy. If it's a property that you will use for investment purposes only then you should expect to put down between 15-25% of the purchase price. If you plan on living in the property then you're looking anywhere from 3.5%-25% depending on how many units.

Account Closed · Answer

@Antony Charlier commercial or residential?

Steven Goland · Answer

Essentially two years of tax returns showing income and good credit.

Consider private lending for investment properties over big banks.

Jabbar Adesada · Answer

@Antony Charlier

Lastly to add onto what everyone else has said your debt to income ratio is important when trying to get approved for a loan

Steve Morris · Answer

For investment property, two main things:

1) Signers/borrowers on the loan need to personally qualify, usually cred score and history

2) Property has to underwrite.  Mainly they're looking for debt service coverage.  So if the loan payment is $1000/month, will the property generate >$1250 in NOI (usual ratio is 1.25)

Then you get a bunch of other stuff dependent on the lender.

Steven Foster Wilson · Answer

@Antony Charlier there are different types of bank loans, but your most typical conventional loan will require the following

- Credit score above 600

- 2 years steady w2 income

- good standing with the public

Antony Charlier · Answer

@Elise Marquette thanks a lot appreciate the info.

Antony Charlier · Answer

@James Edward residential

What are the requirements for a bank loan ?

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