Cracking the Code: What Lenders Really Look For in Your Mortgage Application

Getting a mortgage might seem like a mystery. You fill out forms, hand over your financial details, and hope for a "yes." But here’s the truth: lenders follow a system. And if you understand what they’re looking for, you’ll be in a stronger position to get approved—and even land a better rate.

At Mac Does REI, we believe every buyer should feel confident walking into the mortgage process. So let’s break it down.

The 4 C’s of Mortgage Approval

Lenders evaluate four main areas, often called the "4 C’s":

1. Capacity – Can You Afford the Loan?

This is about your income and how much of it goes toward your debts. Lenders want to make sure you can afford your monthly mortgage payment without struggling.

They’ll look at your debt-to-income (DTI) ratio—a percentage that compares your monthly debt (like car payments, credit cards, student loans) to your income.

Pro tip: Most lenders like to see a DTI below 43%, but lower is better.

📞 Need help calculating your DTI or improving it? Reach out to our team at macdoesrei.com and we’ll walk you through it.

2. Capital – What Savings or Assets Do You Have?

Lenders want to see that you’ve got some money saved up. This helps cover your down payment, closing costs, and shows that you’re financially responsible.

This also includes:

• Savings/checking accounts

• Retirement accounts

• Stocks or other investments

Even if you don’t have a lot saved, you may still qualify. The key is showing consistent saving habits.

🧠 Thinking you might need help building your capital before applying? Talk to a real estate guide at macdoesrei.com. We’ll show you where to start.

3. Collateral – What’s the Home Worth?

This refers to the home you’re buying. The lender needs to be sure the property is worth the price you're paying. That’s why they order an appraisal—a professional estimate of the home’s market value.

If the home appraises lower than the purchase price, the lender might reduce the loan amount—or reject the loan altogether.

🏡 Worried about how home value impacts your approval? We can help you find homes that are fairly priced and unlikely to cause appraisal surprises. Start your search with macdoesrei.com.

4. Credit – How Have You Managed Past Debt?

Your credit score and credit history tell lenders a lot about how you manage money. A higher score can mean:

• Better mortgage terms

• Lower interest rates

• Easier approval

Lenders typically want to see a score of 620 or higher, though some loan programs accept lower. They’ll also look at your credit history—on-time payments, collections, and length of credit accounts.

📈 Want to check or boost your credit score before applying? We’ve helped many first-time buyers do just that. Book a credit review at macdoesrei.com.

What You Can Do Right Now

You don’t have to wait until you’re “ready” to apply. Here are 5 simple steps to get ahead:

1. Pull your free credit report (you’re entitled to one from each bureau annually).

2. Start tracking your monthly income and debts.

3. Set a monthly savings goal—every dollar helps.

4. Avoid opening new credit lines right before applying.

5. Get pre-qualified to see where you stand.

👉 Want help with steps 1–5? That’s what we do best. Contact us at macdoesrei.com and we’ll build your mortgage-readiness roadmap—no pressure, just good advice.

Ready to Take the Next Step?

Whether you’re just starting to think about buying a home or already looking at listings, knowing how lenders evaluate your application puts you in control.

💬 Let’s talk. Our team at MacDoesREI can guide you through the process, connect you with trusted mortgage pros, and help you make smart, confident moves.

📍macdoesrei.com/contact
📞 Call: 469-727-2491
📧 Email: contact@macdoesrei.com