Qualifying Ratios

Qualifying ratios are measurement tools banks and other financial organizations use during the loan underwriting process. An applicant's qualifying ratio, represented as a percentage number, is critical in deciding whether they will be authorized for financing and, in many cases, the loan conditions. In assessing whether to approve loan applications, lenders employ qualifying ratios, which are percentages that relate borrowers' financial commitments to their income. Qualifying ratios might differ between lenders and lending programs. In reviewing an application, they are frequently utilized with a borrower's credit score.