Know Your Rights as a Borrower: What Lenders Can and Cannot Ask You, According to the Law

A borrower who wants to take out a mortgage from a lender, whether a bank or a smaller provider, is required to submit the information that will that they can be trusted with a huge amount of cash and is capable of paying back the sum owed. It is a long and, often, a heartbreaking process. Prospective homeowners do not always get exactly what they asked for due to their current credit score or any issue that is not up to the lender’s standards.

There is a lot of sensitive information being relayed to lenders. What exactly are they allowed to assess and which should be out of bounds?

As more Americans approach various lenders all over the nation to take advantage of the best mortgage rates in years, consumers should take steps to protect themselves. The first thing to do is to know what lenders can and cannot ask borrowers.


One information that you can expect will be asked by every lender you approach for a loan is your income. This is necessary because the lender wants to know that you will be able to pay off their balance every month.

The lender can also ask you about your spouse’s income if you want to use the information to improve your chances of getting a mortgage.

However, if you do not want your spouse’s income to be included, then you are allowed to not disclose that information to the lender. The lender is also not allowed to ask about a former’s spouse’s income if separated.

You may also refuse to disclose the amount they receive in alimony and child support if you do not want to use the money to qualify and eventually pay for the mortgage. However, if you are paying alimony and child support, the lender should know since it might affect your ability to settle your monthly balance.


When it comes to family, there are questions that lenders are allowed and not allowed to ask.

Under the Equal Credit Opportunity Act, lenders should not question whether the borrower is planning to have a family in the near future. It is a problematic question because, in the past, it was used to deny women mortgage. They reason that, when a woman becomes pregnant, they would quit working, therefore, lose their income. They would not be able to pay the loan. The question is discriminatory and, now, against the law.

However, lenders can ask for your marital status and how many dependents you currently have. This information may be used to qualify you as a first-time buyer.

Illness and Disability

man studying law

If a lender asks you if you have any illness or disability, do not answer. The Fair Housing Act and the Americans with Disabilities Act forbids any discrimination against people who are ill or disabled.

Lenders should not ask about the borrower’s physical condition.

Other Questions Lenders Can Ask

Lenders will want to look at your credit history and credit score, debts that show up in your report, assets, and tax returns. Some lenders would also want to know if you have been involved in a lawsuit either as a plaintiff or the accused. The judgment of the case, as well as other expenses related to the lawsuit, may impact the borrower’s ability to pay off the loan.

Lenders may ask about your ethnicity. It might not be important to the loan or your income, but it has to be noted so that the Department of Housing and Urban Development can check that minorities are not being turned down or charged higher fees.

What to Do If a Lender Asks an Illegal Question

Borrowers can take actions against lenders who pry for information that they are not legally required to disclose.

However, if an illegal question was asked during a meeting with a lender, the first thing you should do is to tell them that it is not mandatory for you to provide the information.

If you want to take it further, you can file a complaint to your state’s banking commission. The Federal Trade Commission and the Consumer Federal Protection Bureau would also accept and look into your feedback.

Borrowers are protected by the law against lenders who want to take advantage of their need for money.

Before you approach a lender, arm yourself by being aware of your rights. When a lender attempts to force information that you do not want to disclose nor you are legally allowed not to disclose, you can take action against them.

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