If Buyer A is borrowing $300,000 and Buyer B is borrowing $900,000, which statement is likely true about their loan qualification?

In residential real estate financing, loan qualification standards often vary based on the size of the loan being sought. Typically, larger loans, such as the $900,000 that Buyer B is seeking, are subject to more stringent qualification criteria than smaller loans. Lenders perceive higher risk with larger loans because they represent a greater exposure in case of default.

Consequently, Buyer B, applying for a loan significantly larger than Buyer A’s, may face stricter requirements regarding creditworthiness, income verification, debt-to-income ratios, and overall financial stability. This heightened scrutiny is designed to mitigate the lender's risk associated with larger financial commitments. Therefore, it is accurate to assert that Buyer B will likely be qualified under more stringent standards compared to Buyer A.

In contrast, the other options do not align with common lending practices. The notion that Buyer A will have less stringent standards does not hold with regard to the comparative size of the loans. The possibility that both buyers will be treated equally overlooks the typical approach lenders take to evaluate risk based on loan amounts. Lastly, asserting that neither buyer will need to provide credit history is inaccurate, as most lenders require a credit check for all borrowers to assess their reliability and repayment capability regardless of loan size.