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Purchasing a home is a major endeavor. Potential homebuyers should carefully review their personal finances and understand what mortgage lenders are looking for in applicants. Understanding the following four numbers is critical to obtaining a mortgage.

Credit Score

A credit score indicates a borrower’s past performance with repaying loans in a timely manner. For a large loan like a home mortage, lenders want to see a solid history of repayment; it can be challenging to find a lender who will work with borrowers with low credit. According to Business Insider, the average credit score across all ages is 711. With enough time, credit scores can be raised, so potential home buyers are advised to improve their credit scores before searching for homes.

Down Payment Amount

While it’s common to see car loans offered with no money down, it is extremely rare for home mortgages to require no down payment. Saving a substantial down payment is thought to indicate financial responsibility and personal commitment from the homebuyer. According to, a 20 percent down payment on a home is still a smart financial move but is becoming less common. However, buyers who can’t offer a 20 percent down payment will have to pay for a special type of homeowner’s insurance, called PMI, which can increase monthly payments by hundreds of dollars.

Total Debt Balance

Applicants must disclose all debts to mortgage lenders. This includes credit card debt, student loan balances, child support obligations and any other obligations. Lenders will also want to know the required monthly payment for each loan.

Debt to Income Ratio

Why do lenders want to know so many details about an applicant’s debts? Banks need this information to calculate the debt to income ratio of applicants. Typically, a lender will not approve a mortgage that would raise the applicant’s monthly debt repayments to more than 36 percent of the applicant’s income. Some lenders offer more flexibility but may charge a higher interest rate in return.

The mortgage industry is constantly shifting, and no rule is set in stone. Applicants should always research the exact numbers that a mortgage lender needs before approving a loan.