Consequences of a Bad Credit Score

• A borrower's credit history provides a good indication as to whether they'll fulfill their mortgage agreement and make on-time payments. Raising a credit score before applying for a mortgage helps applicants acquire a good interest rate and a credit approval. Aim for a score 680 or higher.
  
  

Proof of Income and Employment

• Mortgage lenders do verify employment and income to ensure applicants are able to realistically afford a home loan. Proof of income may include tax returns (two years of tax returns if self-employed), paycheck stubs, retirement income or disability compensation.
  
  

Lowering Debts

• Debt ratio also plays a role in qualifying for a mortgage. Ideally, a borrower's monthly debt payments should not exceed 28 percent of their income. Calculate debt ratio by dividing monthly debts by monthly income.
  
  

Downpayment Requirements

• Borrowers ought to plan for a down payment when applying for a mortgage loan. Large down payments such as the traditional 20 percent down are not required by all lenders. Instead, borrowers can qualify for a home loan with as little as five percent down.