Skills · by @tonyjeary

The Two Critical Ratios in Mortgage Lending

A framework for understanding how lenders evaluate borrowers and properties, centered on two essential ratios that determine whether financing will be approved and on what terms. These ratios are fundamental to qualifying for any real estate loan.

What this skill walks you through

1. Residential (typical): 80/20 structure—'20% is required down and 80% is financed.' This is the standard conventional loan.
2. Commercial: Often 30/70—'30% down, 70% would be able to be lendable or mortgageable.' Commercial properties require more equity from the buy
3. Exceptions: Some scenarios allow 90/10 or 95/5. VA loans can be '100% finance, but that's a pretty rare occasion.'

Sourced from How Real Estate Works by Tony Jeary.

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