The 4 Cs of Qualifying for a Mortgage 

The 4 Cs of Qualifying for a Mortgage

Mortgages can seem complicated, but qualifying for one? That really just boils down to four simple C words.

It’s true: From a lender’s standpoint, there are four major factors that influence your ability to get a loan — and they all start with a C. These include credit, capacity, capital, and collateral.

Are you worried about qualifying for a mortgage? Here’s what you need to know about each of the Cs — and how they’ll impact your mortgage application:


Credit includes both your credit history and your credit score. Together, these speak to how responsible you are with your money and how good you are at paying your bills on time. 

Most mortgage loans have a minimum credit score you’ll need to meet in order to qualify. Your score usually impacts your interest rate too, with higher scores getting lower rates and more affordable monthly payments.


Capacity refers to your ability to cover your mortgage payment. To assess this, a lender will look at your income, your debts (credit card payments, student loans, etc.), and your employment history. Typically, they’ll want to see at least two years in a position or industry.

When evaluating your capacity to repay, lenders will usually need documents like tax returns, W-2s, 1099s. They will use your credit report to gauge how quickly you pay off your monthly debts.


Capital simply refers to how much cash you have access to. This can include money in savings, investment accounts, properties, stocks, bonds, and more. They will use bank statements, asset statements, and other similar documents when evaluating this.

Generally speaking, lenders want to see that you have access to at least a few months of mortgage payments should you lose your job or face some other financial struggle (these are referred to as reserves). Some loan programs may require anywhere from six to 12 months of reserves.


Finally, the house you’re buying — which is used as the collateral on your mortgage loan — is another factor. Your lender will be want to verify that its value matches the loan amount you’re asking for (a professional appraisal will do this). This ensures they don’t lose money if you fail to make payments.

Have questions about qualifying for a mortgage?

Qualifying for a mortgage may not be as hard as it seems. There are many loan programs, each with different requirements and terms. Get in touch with an Embrace Home Loans office in your area to find the right mortgage loan for your budget and financial picture.

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By Aly Yale / February 23rd, 2022 / Categories: / Tags:

Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.