Qualification Factors

Lenders look at several factors when deciding whether to loan someone money. These include:

credit score: This is a reflection of how well you manage money and debt. Many lenders require a score of at least 700. At Navy Federal, we consider your banking history with us as well as your credit score, enabling us to provide more loans to more borrowers.

debt-to-income (DTI) ratio: This is a comparison of your monthly debt, including the new home, to your monthly income. Lenders prefer borrowers with low DTIs because it means you’re more likely to be able to afford your monthly payments. 

employment history: Job stability of two years or more indicates that you have a stable income and can pay off debt. 

personal assets: Lenders like to see that you’re conscientious about setting aside money into savings and retirement accounts, as well as investments. Already owning a home, property or other collateral, like a car, also may be a plus.

Getting a Good Rate

These tactics can bolster your chances of qualifying for a loan with a good interest rate:

Check your credit report. You can get a free copy of your credit report from each of the three credit bureaus every 12 months via AnnualCreditReport.com. Verify the accuracy of your name, address, date of birth, Social Security Number, employment history and credit information. Immediately report any discrepancies to the reporting credit bureau.

Pay off debt. Decrease a high debt-to-income ratio by working to pay down debt.

Build good credit. If your credit history is lacking or needs a boost, consider using a credit card for monthly expenses or opening a secured credit card while paying off your balance on time each month. Don’t apply for too many cards or credit at once, however. Too many inquiries on your credit history can make a lender wary.

Save for a down payment. Your down payment amount depends on several variables, including the house price and loan type. 

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