What is one key factor lenders consider when determining a borrower's eligibility for a mortgage?

Lenders consider the debt-to-income ratio (DTI) as a key factor in determining a borrower's eligibility for a mortgage because it provides a clear picture of the borrower's ability to manage their existing debts in relation to their income. The DTI ratio is calculated by dividing total monthly debt payments by gross monthly income. A lower DTI indicates that a borrower has a greater capacity to take on additional debt, making them a less risky candidate for a mortgage. Lenders generally look for a DTI below a certain percentage, often around 43%, to ensure that borrowers can comfortably afford their mortgage payments along with other financial commitments.

In contrast, other options like property size, a borrower's social circle, and neighborhood aesthetics do not have direct relevance to a borrower’s financial situation or their ability to repay the loan. Property size may affect the value of the collateral but does not directly indicate whether a borrower can manage their debt. Similarly, a borrower’s social circle and the aesthetic appeal of a neighborhood do not contribute to assessing financial risk or repayment ability. Thus, focusing on the debt-to-income ratio is essential for lenders to ensure borrowers can meet their mortgage obligations.