Interest Rate and Home Loan Qualification Factors

What factors are used to determine
the interest rate on my mortgage?

Need further proof that there’s no such thing as “one-loan-fits-all”? This page of qualifying factors is an example of some of the many and varied criteria mortgage lenders use to qualify you for a mortgage loan and the interest rate charged. While not all of these conditions are considered on each and every type of loan, most are.

Don’t let this discourage or confuse you. As your loan broker, I can help you determine the best loan for you — one that meets your qualifications, budget and goals.

Loan Purpose

  • Purchase or Refinance
  • Rate & Term or Cash Out (refinance)
  • Construction, Construction-to-Perm


  • Owner-occupied Primary
  • Owner-occupied second/vacation home
  • Non-owner-occupied or Investment property (vacant or leased)

Loan Term

  • monthly
  • semi-annual
  • annual
  • short-term
  • long-term

Loan-to-Value Percentage and/or Combined Loan-to-Value

The percentage of the loan amount or combination of loans compared to the value of the property, inclusive of a down-payment, if applicable

(for adjustable mortgages and equity lines)

  • Treasury
  • COFI
  • COSI
  • CODI
  • others

Property Type

  • SFR (single family residence)
  • condo (low-rise or high-rise)
  • townhouse
  • PUD (Planned Unit Development)
  • multi-unit
  • manufactured
  • rural
  • agro
  • commercial
  • land
  • mixed-use
  • revenue-producing

Borrower Qualifications

  • First-time buyer
  • Credit scores, plus amount of credit, type, and duration
  • Previous derogatory credit and time since last negative
  • Type & amount of gross monthly income
  • Employment or self-employment history
  • Debt Ratio (gross monthly income as compared to debt, inclusive of the new mortgage and associated expenses expressed as a percentage)
  • Mortgage payment history or rental history
  • Personal assets, if any
  • Available reserves, if any
  • Documentation type used to qualify (full, alt, low, or no doc)
  • Documentation type used to verify assets & reserves
    (full or “stated” disclosure)

Loan Type

  • Fixed
  • Adjustable
  • Interest-Only
  • Negative Amortization
  • Amortizing
  • Balloon
  • 1st mortgage
  • 2nd mortgage
  • Piggyback loan
  • Equity Loan
  • Equity Line of Credit
  • Government-guaranteed
  • State and Community programs
  • Graduated Payment Mortgages
  • Prime
  • Sub-Prime
  • hard money (private)
  • commercial
  • construction
  • construction-to-perm

Property State

The state in which the property is located can make a difference in the interest rate and/or availability of certain types of loans.

Considerations (can equally affect your rate)

  • Voluntary or included tax & insurance Impound Account
  • Prepayment Penalty options (where allowed by law)
  • Discount Points Paid by borrower
  • Broker points paid or received in rebate from the lender
  • Interest-Only monthly payment option
  • Allowable Seller-paid percentage of non-recurring closing costs

Lenders in General

Some lenders simply charge higher interest rates than others, from only slightly more to a lot more depending on many of the conditions listed here. In many cases, though, these lenders can offer much faster approval, underwriting and funding than the better-priced or big-name competition — a real advantage for time-critical closings.

Again, don’t let this discourage or confuse you. As your loan broker, I can help you determine the best loan for you — one that meets your qualifications, budget and goals.