What is typically considered a red flag in mortgage lending?

Frequent changes in employment are typically considered a red flag in mortgage lending because they can indicate instability in a borrower's financial situation. Lenders assess employment history as a measure of a borrower's ability to maintain consistent income, which is crucial for making timely mortgage payments. When an applicant has a pattern of changing jobs frequently, it raises concerns about their job stability, which could lead to potential income fluctuations or gaps in employment. Such instability can increase the risk for lenders, as it might signal difficulties in the borrower's ability to fulfill long-term financial obligations like a mortgage.

In contrast, high credit scores, stable income, and consistent payment history are indicative of a reliable borrower. High credit scores reflect responsible credit management, stable income suggests a steady source of funds to cover payments, and consistent payment history indicates a track record of meeting financial obligations. These factors generally contribute positively to a lender's assessment of a borrower's creditworthiness.