Which factor can significantly affect a borrower’s eligibility for a mortgage?

Credit history is a critical factor that significantly influences a borrower's eligibility for a mortgage because it reflects the borrower’s track record in repaying debts. Lenders use credit history to assess the risk of lending money; a strong credit history demonstrates responsible financial behavior, indicating that the borrower is likely to repay the mortgage on time. Factors such as payment history, the amount of debt owed, length of credit history, types of credit used, and recent credit inquiries all contribute to the overall credit score. A higher credit score typically results in better loan terms, including lower interest rates and more favorable conditions, making it essential for potential borrowers to understand and manage their credit histories effectively.

While other factors like annual income, employment duration, and number of dependents do play important roles in the mortgage approval process, they do not carry the same weight as credit history when it comes to evaluating a borrower’s likelihood of meeting payment obligations.