A lender reviews many aspects when considering how strong a borrower is. Such factors include credit history, income, assets, down payment invested into the transaction. I compare it to legs on a chair. A borrower can have one leg shorter than the and the chair still works. Two shorter legs and the chair becomes a little riskier, however you can still use it. You can read more on the link below.
Lenders basically weigh three items in order to make a decision on your loan. These three items are CREDIT, CAPACITY, and COLLATERAL, commonly referred to as THE THREE Câ€™S. When all three Câ€™s are strong, the risk on the loan is low. You will then qualify for the best terms. If any one of the three Câ€™s is weak, you will still be likely to qualify for a mortgage, but the risk to the lender is higher, which means the rate may be higher as well. If all three Câ€™s are weak, it can get difficult to obtain a mortgage. Underwriting is a layering of the risk or a blended analysis of these three factors.