What do lenders looks for in qualifying you?

Question

I’ve been working tirelessly to fix my credit and get it in optimal lending shape. I have been able to pay off all my debts and debt free but have negative items from years ago that still have some time to fall off.

My credit karma score is at 661. What are some factors that lenders look at when applying for loans?

Thanks BP!

My credit karma score is at 661. What are some factors that lenders look at when applying for loans?

Thanks BP!

Account Closed · Answer

@Ronald Mejia, first off @Frank Hinck makes a good point about clarifying conventional vs hard money. If you're working with hard money, the terms can vary, but typically they want to know a bit about the property, your projected rehab budget, and what you think the ARV is. They want to see that your #'s are realistic and will actually work for a project.

Account Closed · Answer

• A couple big ones:
• Job history (W-2 is easier to qualify with than 1099) and having at least 1 year, if not 2+ makes it easier.
• DTI will also be a big part of qualification.
• Reserves- lenders want to see that you have money in checking or savings

Account Closed · Answer

@Ronald Mejia, with your question about credit scores for conventional loans: I think in the 500's, you'd have very limited options. When you get above 620, there are more options available. Once you move into qualifying range, it will also determine the interest rate you get. Here's a hypothetical from a recent Bankrate article.

Rates are obviously historically low, but you get the point (pun maybe intended).

Matt Rosen · Answer

@Ronald Mejia

Good questions. If you are buying non owner occupied properties then here are some general guidelines that will qualify you.

660 Credit Score(rehab, fix and flip) 680 (rental, cash out refinance)

20% down on purchase price plus closing costs

Experience level: 3 investment deals in the last 36 months will get you much better interest rates and higher leverage

DSCR (Debt service coverage ratio) 1.25 or higher for the rental long term loans

75% ARV

Hope this helps

•

Amberly Jones · Answer

What type of lending are you looking for? This will help provide the right criteria of what lenders are looking for. There are lots of resources that evaluate individual finances to recommend the right product that might be helpful for you! Let me know if you'd like suggestions.

Bradley Padula · Answer

Good advise in this thread. I recommend talking to 3 or 4 lenders, you'll get a good sense after talking to a few, and at the same time can start developing relationships

Ronald Mejia · Answer

@Chad Lanting awesome thank you, how about as far as credit score? What would be considered the threshold for qualifying.

Ronald Mejia · Answer

@Frank Hinck both

Frank Hinck · Answer

@Ronald Mejia

Hard Money Lenders or traditional lenders?

What do lenders looks for in qualifying you?

Most Popular Reply