Question:

What are the minimum qualification requirements for a mortgage with good interest rates?

Answer:

If you have decided to become a homeowner, you will have to consider several factors that will constitute the minimum qualification requirements for obtaining a nice home loan with good interest.

It will be best if you have a two-year or more employment history with the same employer. Lenders will really like that.

Another thing is the DTI (debt to income) ratio. The expected mortgage payment combined with other expenses you may have on credit cards, car loans, etc. should not exceed 36 percent of your income before tax.

Another factor towards the qualification requirements is the loan to value ratio, or LTV. LTV equaling 80% means you are ready to make a 20 percent down payment, thus you'll have some equity on the house. An LTV of 80 or less is highly desirable. However, it is possible to qualify for a favorable loan with much higher LTV, such as 95, in which case you may need a PMI (private mortgage insurance).

Another thing you may like to consider is your credit score. A credit score over 720 almost makes sure that you will be offered the best interest rates for a mortgage. A 620 credit score will put you in the subprime category where you will have hard time shopping for a home loan with favorable interest rates.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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