Background

• A lender is taking on a risk any time it extends a loan. The riskier the loan, the more reluctant the lender will be, and the more the lender will charge if it does extend a debt. In the case of a mortgage, a very large loan, the risk is high. As a result, you must personally be a low-risk borrower to get the loan.
  
  

Factors

• Your down payment is a primary factor. Many lenders will not consider making a loan without at least 10 to 20 percent down. Lenders will consider other debt obligations before determining your limits, and they will compare these debts to your overall income. The lender will look at your history of repaying debts, as viewed by your credit score. Finally, the lender will want to know your income is not just sufficient but stable; it is best if you have held the same job for more than two years and have shown an increasing salary.
  
  

Expert Insight

• If you nearly qualify for a loan but need a little assistance, consider applying for loan insurance through the Federal Housing Administration. The FHA aims to make home ownership affordable by helping qualified borrowers overcome some issues such as insufficient down payment or low income.