How does income influence a lender's mortgage decision?

Income is a crucial factor in a lender's mortgage decision because it provides a clear indication of a borrower's ability to meet mortgage payment obligations. Lenders assess income to determine whether borrowers have sufficient income to comfortably manage monthly payments, including principal, interest, taxes, and insurance. A reliable income stream helps lenders gauge the borrower's financial stability and ability to pay back the loan over time.

While income may also intersect with other factors, such as influencing the type of loan available and potentially affecting the credit score indirectly, its primary role lies in demonstrating the borrower's capacity to cover the agreed-upon payments without financial strain. Therefore, an adequate income level is a key requirement for loan approval and risk assessment in the mortgage lending process.