Affordability and qualification pages explain how lenders judge whether a borrower can reasonably carry the mortgage. These terms sit at the intersection of income, debts, credit history, savings, and lender risk standards.
Start with Debt-to-Income Ratio (DTI), then compare Front-End Ratio and Back-End Ratio. Those pages show how housing costs and other monthly obligations are measured against income during qualification.
Then read Credit Score to understand how lenders use credit behavior alongside ratios rather than instead of them. After that, move into Loan-to-Value Ratio (LTV), Combined Loan-to-Value Ratio (CLTV), Down Payment, Reserve Requirements, Prequalification, and Preapproval to see how leverage, savings, and early lender screening fit into qualification.
This section also includes Debt Service Coverage Ratio (DSCR) for mortgage situations where cash flow from a property matters alongside or instead of standard owner-occupant income measures, plus Gift Funds and Gift Letter for the part of qualification where source of funds matters as much as amount.
In this section
- Debt-to-Income Ratio (DTI)
DTI compares monthly debt obligations to gross monthly income to show how heavy the borrower's recurring debt load is.
- Front-End Ratio
Front-end ratio compares housing-related monthly expense to gross monthly income.
- Back-End Ratio
Back-end ratio compares housing cost plus other recurring monthly debt obligations to gross monthly income.
- Credit Score
Credit score is a numeric summary of credit behavior that lenders use as one input in mortgage approval and pricing.
- Loan-to-Value Ratio (LTV)
LTV compares the mortgage amount with the home's value to show how much leverage is being used in the deal.
- Combined Loan-to-Value Ratio (CLTV)
CLTV compares all mortgage debt secured by the property with the home's value, not just the first mortgage.
- Down Payment
Down payment is the portion of the home's price the borrower pays upfront instead of financing.
- Reserve Requirements
Reserve requirements are lender expectations that the borrower still has enough cash or liquid assets after closing.
- Prequalification
Prequalification is an early estimate of mortgage fit based on preliminary borrower information rather than full underwriting.
- Preapproval
Preapproval is a stronger lender review indicating the borrower appears to qualify under an identified mortgage framework.
- Debt Service Coverage Ratio (DSCR)
DSCR compares property cash flow with debt obligations and is often used in mortgage contexts where rental income drives qualification.
- Gift Funds
Gift funds are money given to the borrower for mortgage-related costs such as down payment or closing expenses, subject to lender rules.
- Gift Letter
A gift letter is the lender-requested document stating that funds provided to the borrower are a gift rather than a loan.