Mortgage Qualification. What You Should Know.

If you’re in the market to buy a home, you are likely aware that the financial crisis a few years ago has led to changes in qualifying for a mortgage.


As a result to the downturn in the economy, mortgage lenders were forced to tighten their belts on approving new home loans to prevent foreclosures and the like. These changes have led potential home buyers to be reluctant in their efforts to buy a home, for fear of being rejected. That said, government-backed programs have been added for first-time home buyers with subprime credit scores to get mortgage insured via the Federal Housing Administration. With this, home buyers are able to put down as little as 3.5 percent of the home’s purchase price, rather than the popular theory that the down payment needs to be 20 percent of the purchase price or more.

So, what will lenders look at when you’re putting together your loan application? 

-credit scores
-loan-to-value ratios
-debt load
-overall financial portfolio health

The good news is, that even if your financial health isn’t the best, you may still have options to buy a home. Some banks have lowered the minimum credit scores, or FICO scores, for loans that are backed by the government, the Federal Housing Administration, Fannie Mae or Freddie Mac.

There are also alternative lending sources, such as community banks, who use a “common sense” approach to loan approval, which can give hope to buying a home.

If you’ve been thinking of buying a home and aren’t sure if it’s “the right time,” contact your Realtor and discuss the pre-approval process. And, when the time is right, we welcome you to contact us. We have been in the business for 125 years…providing title insurance, escrow and closing needs to clients. We work hard to close your home purchase quickly and efficiently, with the utmost attention to detail. We look forward to working with you!


About rowlandtitle

Rowland Title Company is Madison County’s premiere title company, celebrating its 125th year in business, and providing title insurance, escrow and closing needs to all 92 Indiana counties. For more information visit Rowland Title at (
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