Your Lake of the Ozarks Mortgage Lender: What Are the 4 C's of Mortgage Lending?

Monday, September 15, 2025

What Are the 4 C's of Mortgage Lending?

Question: What are the 4 C's lenders use to qualify borrowers for a mortgage?

Answer: When applying for a mortgage, lenders evaluate your financial profile using the "4 Cs":

Credit

Capacity

Capital

Collateral

Understanding these can boost your approval odds.

Credit: Your credit score and history reflect your debt management. A score above 670 (FICO) is ideal. Lenders check payment history, credit utilization, and inquiries. Improve your score by paying bills on time and reducing debt (Experian, 2025).

Capacity: This measures your ability to repay based on income and debt-to-income ratio (DTI), ideally below 43%. Stable employment (two years minimum) and consistent income are key. Pay down debts to strengthen capacity (CFPB, 2025).

Capital: Lenders assess your savings for the down payment and reserves. A 20% down payment avoids private mortgage insurance, and reserves ensure financial stability. Save early to show readiness (Fannie Mae, 2025).

Collateral: The property secures the loan. An appraisal confirms its value and condition, ensuring it covers the loan amount. Choose a well-maintained home in a stable market (HUD, 2025).

The 4 Cs gauge lending risk. Strengthen them by checking your credit, lowering DTI, saving more, and selecting a solid property. Consult Team Lasson for guidance.

Sources: Experian, CFPB, Fannie Mae, HUD

Team Lasson is here to assist with all of your home buying needs! If you’re considering taking the leap into home ownership in the near future, we’re here to help. Contact us today to explore which loan program aligns best with your financial goals.

The first step in preparing for your big purchase is to get pre-approved for a mortgage at Lake of the Ozarks. Visit www.yourlakeloan.com or call us at (573) 216-7258 to get started today!