Quick answer
A conventional lender may review credit history and scores, income and employment, monthly debts, funds for closing and reserves, occupancy, property type, appraisal and other risk factors.
Requirements vary across automated and manual underwriting, loan features, occupancy and investors. A headline minimum does not promise approval or describe the terms available to a specific borrower.
Income, employment and debts
Income must be documented and considered stable and likely to continue under the applicable guidance. Salaried, variable, commission, self-employed, rental and other income types can require different histories and calculations.
The lender also evaluates recurring obligations used in the debt-to-income analysis, including housing expenses, installment accounts, revolving debt, student loans, alimony or support when applicable, and other financed properties.
Credit, assets and source of funds
Credit reports, payment history, recent inquiries, major derogatory events and the underwriting system’s findings can affect the review. Funds used for down payment, closing costs and reserves must come from acceptable, documented sources.
Personal funds, eligible gifts, grants and permitted subordinate financing can be treated differently. Avoid large unexplained deposits or transfers before asking how they should be documented.
The property and loan structure
Primary residences, second homes and investment properties can carry different down-payment, reserve, pricing and eligibility requirements. Condominiums, manufactured homes and multi-unit properties may require additional review.
The appraisal addresses value and property information, but it is not a home inspection. Final approval requires the borrower, property and transaction to satisfy the lender’s conditions.