Loan Application

The Uniform Residential Loan Application (Form 1003) requires relevant financial information, such as your credit and employment history, assets, real property owned, subject property information and income. This form should be used for conventional loans on single family to four-unit residences.

Employment

Lenders need to see that a borrower is currently employed and has a history of steady employment. Typically, they like to see at least two years employment at the same job or line of work, with no gaps of unemployment.

Income

The borrower must be able to show a lender that in addition to steady employment, the income is also stable, with little or no fluctuations in hourly pay, salary, bonuses, and commissions. The income must be higher than the total monthly debts listed on Form 1003, including the new home loan payment, by a certain percentage.

Debt

According to Mortgage Underwriters, Fannie Mae and Freddie Mac prefer the borrower's total monthly loan payment, including principal, interest, taxes and insurance, or PITI, not exceed 28 percent of gross monthly income. In addition, total obligations, including revolving debt and other loans, should not exceed 36 percent of gross monthly income.

Credit

Lenders pull a tri-merged credit report from Equifax, Experian and Trans Union, the three major credit reporting bureaus, showing a FICO score ranging from 300-850. The report reflects anywhere from student loans to past mortgages, showing the frequency of default, 30-day late payments, past foreclosures, repossessions, liens or judgements.

Collateral

Lenders consider collateral, such as equity in real property and cars. List all assets such as cash on hand, money in the bank, retirement accounts, stocks and bonds, to strengthen a loan application.

Source:

eFannieMae: Making Home Affordable

Mortgage Underwriters

More Information:

eFannieMae: Download Form 1003 in PDF