Answer: -Why does one person qualify for a 30 year fixed at 6%, another for a 2 year A.R.M. at 7% with a pre-payment penalty and a third person not qualify for a loan at all? Although there are many factors that contribute to a lending decision, keep in mind the "3 C's".Cash (down)The more money a person will put down (or has in equity for a refinance) the better. The logic is the more money you have in your home the less likely you are to default on your loan. Credit (report)A person's credit history and score paint a picture of their past financial performance. The logic is people tend to perform in the future as they did in the past.Capacity (to repay loan)A person's capacity to repay the loan has three aspects. First is debt-to-income ratio. For example if a person earns $3,000 gross per month, and their reported monthly liabilities are $500 (i.e. car payment, student loan, minimum credit card payments) then a $1,000 proposed monthly house payment would bring their total monthly liabilities to $1,500- resulting in a 50% DTI ratio. Various loan programs limit between 38% to a 65% back (total) ratio. Second is job history. Typically a two-year history in the same field is required. If you worked as a construction employee for 15 years, and then got a contractors licensed and became self-employed in the same field of work- your time as an employee does not count towards the 2 year requirement. Related education normally counts (for example a doctor working for one month will qualify as he/she had 2+ years of related schooling). Reasonable explanations must be made for significant pay increases, decreases, etc. Third is reserves. Some loan programs require 2-12 months of mortgage payments in savings, retirement, etc… The reasoning is if you lost your job the day the loan closed you would be able to make a few payments until you found new employment.Think of the 3 C's as the legs of a stool; the sturdier they are the better. Lenders view 3 strong C's favorably. However programs often exist for 2 or 1 strong C's. However the weaker the C's- the less favorable the terms of the loan; and if weak enough, no loan will be offered. These are not the only factors.I work for Virginia Mortgage, LLC in Williamsburg, VA. -I'm a processor in a local mortgage company. Personally, I would go with BIG local. Ask around and find the biggest local company, if they have an in house lender, that's what I would say is your best option. Just make sure they are willing to work with you, becuase it might take you 6 months or so to really clean up your credit and get things where you will be happy. Just ask around, look at advertising, but I say big local is the way to go. -Find a good real estate agent, and get the real estate agent to refer a mortgage boker to you. The have listsof excellent brokers they have worked with. You are smart to get pre-qualified first. The agent will be able to wortk with you and the mortgage broker to find something in your price range and in the area you want. By the way, the best way to get a good real estate agent is to call a manager in a local office of a large national company (like century 21, or Prudential, or Coldwell Banker) and ask for an agent that has been in the office for at least 3 years, and is highly rated.