Before you get the keys to your new home, there’s one all-important step: getting approved for a mortgage. So, what do lenders look at when deciding whether or not to approve your home loan? It comes down to four key factors: collateral, cash, capacity, and credit.
You can think of them as the four legs of a chair. Each one plays an important role in creating a strong, stable foundation for your mortgage. We’ll break down each one below.
Collateral | AKA The Home Itself
If we’re talking mortgage, collateral is the property you are purchasing. It serves as security for the loan and helps protect the lender’s investment while the mortgage is being repaid.
Did you know? Before approving a mortgage, lenders typically evaluate the property to confirm its value and ensure it supports the loan amount.
Cash | Planning for Upfront Costs
There’s more to buying a home than the monthly mortgage payment. You’ll also want to plan for upfront expenses, which may include:
- Earnest money deposit
- Down payment
- Closing costs
The amount you’ll need depends on your loan and financials. If you choose to work with Taylor Morrison Home Funding, Inc.,* they may have options, like lower down payment programs, free credit score help with Able. Ready. Own.®, and beyond!
Curious about the different types of loans that may be available to you? Explore loan types here.
Capacity | Making Room in your Budget
Your income and existing financial commitments help lenders understand your ability to make mortgage payments. They’ll typically consider factors like:
- Employment
- Income
- Debt-to-income ratio | Learn more here.
Credit | Understanding Your History
Your credit history helps lenders understand how you’ve managed your credit over time. They may review your credit score, payment history, and existing debts when evaluating your mortgage application.
If buying a home is on the horizon, simple habits like paying bills on time and keeping credit card balances manageable can help you build a positive credit history.
And don’t forget Taylor Morrison Home Funding, Inc., has a free program, Able. Ready. Own.®, designed to help you improve your credit score before you apply for a loan.
Thanks for Reading
Well, there you have it! Collateral, cash, capacity, and credit each play an important role in the mortgage qualification process. Understanding these four factors can help you feel prepared as you explore your options and take the next steps toward homeownership.
Not sure where to begin? That’s okay. Mortgage professionals at Taylor Morrison Home Funding, Inc. can walk you through the process, answer your questions, and help you understand your options. With a little preparation and the right guidance, you’ll find your place to call home in no time.
Homebuying Resources
Explore resources at Taylor Morrison Home Funding, Inc. here.
Explore new Taylor Morrison homes and communities here.
Blog is intended for general informational purposes only and not as an exhaustive comparison of all factors applicable to your personal financial situation. Data used was derived from third-party sources and deemed reliable as of the date obtained, but not guaranteed, offered as investment or tax advice, or independently verified by Taylor Morrison; all information remains subject to change outside of Taylor Morrison’s control. Images do not reflect a racial, ethnic, age or familial status preference. All registered and unregistered marks of third parties used for illustrative purposes only are the exclusive property of the respective owners. © November 2026, Taylor Morrison, Inc.
*Taylor Morrison Home Funding, Inc., affiliated lender of the respective Taylor Morrison selling entities (“Affiliated Lender”), NMLS # 8588, 495 North Keller Road, Suite 550, Maitland, FL 32751, Licensed locations: AL: #8588 | AZ: #BK-0917436 | CA: DFPI #4130023 | CO: Registration #8588, PH# (866) 379-5390 | FL: #MLD1920 | GA: #52654 | IA: #2026-0147 | ID: #MBL-2080008588 | IN: #DFI-66890 | KY: #MC938189 | KS: #MC.0027810 | NV: #NMC-1198098 (branch located at 1820 Festival Plaza Dr., Ste. 220A, Las Vegas, NV 89135 PH# 866-379-5390) | NC: #L-191654 | OR: #ML-4272 | SC: #MLS-8588 | TN: #8588 | TX: #8588 | UT: #14303988 | WA: #CL-8588 | www.nmlsconsumeraccess.org Buyer is not required to finance through Affiliated Lender to purchase a home; however, Buyer must elect to utilize the services of Affiliated Lender to receive certain promoted incentives as outlined in Buyer’s specific Purchase Agreement, which may differ by time, home selected, community and jurisdiction or contain other qualifying criteria. All loans are subject to underwriting and loan qualification of the lender. Services not available in all states. Rates, terms and conditions offered are subject to change without notice.
