Depending on the type of loan you are trying to obtain, your lender will use any of several industry lending ratios to determine whether you qualify for a loan, what type of loan you may qualify for, or the value of the loan you qualify for.
While these are not the only factors used in deciding your creditworthiness, they do play a big part in your lender’s calculations. Knowing a little about these ratios can better equip you for the loan application process.
Here are some of the ratios your lender will use to decide whether you should qualify for a mortgage as you shop for your next home.