A mortgage capacity report is a document that outlines how much money a borrower can borrow to purchase a home. It takes into account the borrower’s income, assets, and liabilities. This report is essential for both the lender and the borrower. The lender needs to know how much money the borrower can afford to borrow, and the borrower needs to understand his or her borrowing limit.
What should I know about this?
This report, also known as an affordability analysis or credit review, is a document that lenders use to evaluate the borrower’s ability to repay the loan. This document summarizes your income and expenses and includes information about your debts and other obligations. A mortgage capacity report can be used for all types of mortgages, including conventional loans, FHA loans, and VA loans. To prepare this document, lenders generally request several different types of information:
- Income: Lenders pull official documents or records that show how much money you make each month from paychecks, social security benefits, pensions, or other sources of income. They’ll want to see at least two years’ worth of tax returns to verify your income.
- Expenses: Lenders also want to know all their monthly bills and expenses, aside from their mortgage payments. This includes child care, groceries, medical expenses, student loan payments, and debt obligations (e.g., credit cards).
- Debts: Your debts include any outstanding loans or other debts that you have that require regular repayments, such as car loans, credit card balances, and student loans. The lender will calculate an expected payment amount for each type of debt and factor these into their analysis of your capacity to repay the mortgage loan.
We hope this information has been useful to you.