What are lenders looking for?

Let’s just say that if there are any financial skeletons in your closet, they’ll come out during the homebuying process. When reviewing your application, lenders typically look at the ‘‘four Cs’’ of credit—capacity, credit history, capital, and collateral—so come prepared to discuss and/or show proof of everything from past bankruptcies to alimony payments to credit blemishes, and everything in between. The individual lender has its own requirements, but the process generally starts at the credit rating and works backward from there. The better your credit, the less ‘‘other’’ documentation you’ll have to show.
At a minimum, you’ll need to produce the same information you did for the preapproval, then sit back and wait while the lender sifts through it. Be prepared to come up with additional documentation, such as proof of additional income, statements that show certain accounts were ‘‘paid off’’ even though it doesn’t reflect that on your credit report, and tax returns for the last two years if you’re self-employed.