These are the 4 C’s of Credit: Credit, Collateral, Capacity, and Capital

Credit: Lenders will review your credit history to determine your overall credit worthiness.

• Collection accounts
• Charge-offs
• Judgements
• Bankruptcies and foreclosures

Collateral: in the case of buying a mortgage, the collateral is the home you are buying.

• Single-family homes
• Multi-family dwellings of up to 4 units
• Condominiums
• Planned unit developments, townhouses
• Some types of manufactured homes
• Other state-specific requirements
• Contingencies – financing and home inspection
• Provisions for a final tour of the house prior to closing

Capacity: Do you have enough income to make the monthly payment?

• Income source or employment
• Length of time employed
• Predicted time employment is expected to continue into the future.
• Expenses like car payments, student loans, credit card payments, personal loans, child support, alimony, and other monetary obligations.

Capital: Cash needed to close on a property including down payment, closing costs, and any reserves.

• Savings: Investments, 401(k) accounts, retirement accounts, stocks, and other types of similar assets.
• Gifts from family members
• Down payment assistance programs
• Grants or matching funds programs