FinancingIntermediate

What Is Compensating Factors?

Compensating factors are strengths in a loan application — like large cash reserves, a low LTV, or a long employment history — that an underwriter weighs to approve a loan despite a weaker area elsewhere, like a higher DTI.

Most useful for: Repeat Buyer · Homeowner
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Compensating Factors
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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.

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