What Lenders Want to See in a Borrower for Fast Approval

What Lenders Want To See In A Borrower: How To Qualify For A Mortgage In 2025

Are you wondering what lenders want to see in a borrower? Whether buying your first home or applying for a mortgage after a rough financial patch, understanding what lenders look for can help you get approved faster and with fewer surprises. In this guide, we break it down in plain language so you know exactly how to prepare.

Lenders Want to Make Sure You Can Pay Back the Loan

The first thing lenders want to see in a borrower is the ability to repay the mortgage. They don’t want to set you up to fail. That’s why they check your income, job stability, credit, and debt. They want to make sure you can make the monthly payments now and in the future.

Mortgage lenders follow rules set by agencies like FHA, VA, USDA, and Fannie Mae. These rules help lenders decide if a borrower qualifies. If the lender follows these rules and you meet the guidelines, they can sell the loan to investors on the secondary market. That’s how lenders keep their business running.

What Lenders Want To See In A Borrower With Good Credit

Ideally, lenders want a borrower who has:

• High credit scores (usually 620 or higher)
• Steady job and income
• Clean payment history (no lates payments)
• Low debt compared to income
• Money saved (reserves)
• A history of renting or making mortgage payments on time
• No bankruptcies or foreclosures in the past few years

That’s the picture-perfect borrower. But let’s face it—most people have a few bumps in the road. And that’s okay. At Gustan Cho Associates, we work with borrowers who don’t fit the perfect mold.

What Lenders Want To See In A Borrower With Bad Credit

Having bad credit doesn’t mean you can’t score a mortgage. Lenders want to know why you ran into problems before and see that you’re getting back on track.

Example:

Let’s say you lost your job in 2021 and missed a few payments. Maybe you even filed for bankruptcy. But you’ve been working again for over a year, paying everything on time, and your credit is improving. Lenders like that!

They look at the whole story. A bad credit score from two years ago isn’t as important as what you’ve done recently. If you’ve been rebuilding, you’re already moving in the right direction.

Re-Establishing Credit After Bankruptcy or Foreclosure

If you had a bankruptcy, foreclosure, short sale, or deed in lieu, lenders want to see that you’ve taken steps to rebuild your credit. Here’s what they’re looking for:

• No new late payments since the bankruptcy or foreclosure
• New accounts in good standing (like secured credit cards or credit-builder loans)
• At least 12 months of on-time payments

At Gustan Cho Associates, we don’t automatically deny you for a past bankruptcy or foreclosure. We take time to understand your situation. Some lenders have overlays (extra rules on top of FHA, VA, or conventional guidelines). We don’t.

Rental History Matters

Lenders also want to see that you’ve been paying rent on time. This shows you can handle a monthly housing payment. If you pay your landlord by check or bank transfer, it’s easy to prove. But if you pay with cash, it won’t count.

To verify rent, lenders may ask for:

• 12 months of canceled checks
• 12 months of bank statements
• A verification letter from a licensed property manager

What lenders want to see in a borrower is proof. Paying rent in cash with a handwritten receipt won’t help.

No Recent Bank Overdrafts

Lenders who review your bank statements don’t want to see overdrafts. This is a red flag. It tells them you might not manage your money well.

Keep your account in good standing for at least 12 months before applying for a mortgage. Set up alerts to avoid accidental overdrafts. It’s a simple way to show you’re financially responsible.

What Lenders Want To See In A Borrower With High DTI

DTI stands for Debt-to-Income Ratio. It’s how much of your monthly income goes toward paying debts. Lenders look at both:

• Front-end DTI (housing only)
• Back-end DTI (housing + all other monthly debts)

Most lenders want to see a back-end DTI under 50%. However, FHA allows up to 56.9% with strong compensating factors.

If your DTI is high, lenders want to see:

• Great credit scores
• Solid job history
• Reserves (money in the bank after closing)
• On-time rental or mortgage payments

At Gustan Cho Associates, we work with high DTI borrowers every day. We understand real life doesn’t always fit in a box.

Consistent Employment and Income

You don’t need to be at the same job for two years, but lenders want job stability. If you changed jobs but stayed in the same line of work, that’s usually fine.

What lenders want to see in a borrower includes:

• 2 years of work history (not necessarily at the same job)
• Consistent or increasing income
• Pay stubs, W2s, or tax returns

If you’re self-employed, lenders usually want to check out your tax returns for the past two years. But if you’re going the bank statement loan route, we can qualify you based on 12-24 months of business deposits instead of tax returns.

Down Payment and Reserves

The more money you can put down, the better. But many loan programs let you buy a home with little or no down payment:

• FHA: 3.5% down
• VA and USDA: 0% down
• Conventional: 3% down for first-time buyers

Still, what lenders want to see in a borrower is money left over after closing—called reserves. Having 1-2 months of mortgage payments in your account shows you’re not living paycheck to paycheck.

Using Compensating Factors

If one area of your application is weak, lenders look for compensating factors to offset the risk. These include:

• High credit scores
• Low loan-to-value (LTV)
• Large down payment
• Extra reserves
• Long-term employment
• Strong rental history

What lenders want to see in a borrower is a full picture. If you don’t meet the rule in one area, show strength in another.

Recent Changes to Lending in 2025

In 2025, lenders are using new credit scoring models (like FICO 10T and VantageScore 4.0), which better reflect recent payment patterns. This means:

• Positive credit behavior shows up faster
• Late payments carry more weight
• Buy now, pay later accounts and utility payments may impact scores

Also, more lenders are using alternative income options like gig work, part-time jobs, and side hustles. If you’re self-employed, there are now more loan programs that don’t require tax returns.

Why Work With Gustan Cho Associates

At Gustan Cho Associates, we understand what lenders look for in a borrower, but we also recognize that real life can be messy and imperfect. That’s why we offer a range of solutions, including no overlays on FHA, VA, USDA, and Conventional Loans and flexible credit and income guidelines. We aim to provide fast closings, often within 30 days or less, and personalized assistance from experienced loan officers.

If you’ve faced rejection from other lenders or don’t fit the typical “perfect borrower” profile, we encourage you to let us take a second look. We specialize in approving loans that other lenders may not be able to accept.

Ready to Take the Next Step?

If you want expert help understanding what lenders want to see in a borrower and how you can qualify, please contact Gustan Cho Associates at 800-900-8569, text us for a faster response, or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

Final Thoughts

Understanding what lenders want to see in a borrower can make all the difference in getting approved for a mortgage. Focus on showing that you’re financially responsible, even if you’ve had credit problems in the past. With the right lender and guidance, homeownership is within reach.

Frequently Asked Questions About What Lenders Want to See in A Borrower:

Q: What Lenders Want to See in a Borrower Before Giving a Loan?

A: Lenders want to see stable income, a good credit history, low debt, and proof that you can repay the mortgage on time.

Q: Can I Get a Mortgage with Bad Credit?

A: Yes! What lenders want to see in a borrower with bad credit is a strong reason for past issues and proof that you’re now paying everything on time.

Q: Do Lenders Care About Job Changes?

A: Yes, but what lenders want to see in a borrower is steady work in the same field, even if you’ve changed jobs.

Q: How Important is Rental History for a Mortgage?

A: Very! What lenders want to see in a borrower is on-time rent payments. They show that you’re ready for a mortgage.

5. Will a Past Bankruptcy Stop Me from Getting a Loan?

A: Not always. Lenders want to see re-established credit and no new late payments from a borrower after bankruptcy.

Q: What if My Debt-to-Income Ratio is High?

A: That’s okay if you have other strong factors. What lenders want to see in a borrower with high DTI is good credit, savings, and job stability.

Q: Do I Need a Big Down Payment?

A: No. What lenders want to see in a borrower is that you have some money saved and can afford monthly payments, even with a low down payment.

Q: Can I Use Gig or Self-Employed Income?

A: Yes! In 2025, what lenders want to see in a borrower includes proof of steady gig or self-employed income through bank statements or deposits.

Q: Will Bank Overdrafts Hurt My Chances?

A: Yes. What lenders want to see in a borrower is a clean banking record with no overdrafts in the past 12 months.

Q: What if I Were Denied by Another Lender?

A: Don’t give up. What lenders want to see in a borrower can vary. At Gustan Cho Associates, we approve loans others turn down.

This blog about “What Lenders Want to See in a Borrower for Fast Approval” was updated on July 21st, 2025.