When you approach a mortgage lender for a home loan, you already know the amount that you need to borrow. What you don't know is if you can qualify for the loan amount you need. The lender can give you a pretty good idea of what you can borrow, after asking you a series of questions about your assets, income and credit history.

How Assets Affect Mortgage Eligibility

The mortgage lending industry has learned that when people have an equity stake in their home, they are more likely to repay the mortgage loan used to finance it. If you are buying a home, a lender wants you to have a down payment - and will need to verify that you have the assets to cover their minimum down payment requirements. If you are refinancing an existing mortgage loan, a lenders wants you to have some equity built up in the home - and will have to verify what the home is currently worth, and how much you owe against it.

How Income Affects Mortgage Eligibility

You will need to prove to the mortgage lender that you have a steady source of income that is sufficient to cover the cost of the monthly loan payments. When you apply for a mortgage loan, a lender will have to verify how much you earn monthly, and check to see how long you have been employed in the same line of work.

How Monthly Obligations Effect Mortgage Eligibility

When a lender is determining how much home loan you can afford, it also takes into consideration the amount of other debt obligations that you have to pay every month (i.e. monthly payments on your car/credit cards) and any child support and alimony payments you are responsible for paying (if any). These financial obligations are added to the proposed monthly loan payment to determine what your total financial obligations would be under the loan scenario.

How Credit History Affects Mortgage Eligibility

In the lending business, past activity is often an indication of future activity. If you have a history of not handling your debt obligations responsibly, lenders feel that there is a risk that you won't handle them properly moving forward. To get an idea of your ability to handle credit, a mortgage lender will run your credit report to see your existing debt obligations and your credit score.

Combination of Factors Affects Final Loan Decision

When making a final decision about approving your loan request, the lender will take compensating factors into consideration. For example, making a very large down payment can offset a high debt-to-income ratio. So, if you feel that you might be lacking in one of the above factors, don't let that stop you from contacting a mortgage lender about a loan - they might be able to work around certain issues to get the home loan you need.