5 C's of Credit: capital

• A. The total debt the borrower has.
• B. The borrower's income level.
• C. The amount of money the borrower is investing in the property.
• D. The property's appraised value.

Answer: (C)

Capital refers to the money the borrower personally puts into the deal, such as the down payment and any cash reserves brought to closing. This shows they have real financial skin in the game and lowers the lender’s risk by reducing the loan-to-value ratio and providing a cushion if circumstances change. In other words, capital is about the borrower’s own investment in the property, not about ongoing debt levels, income for repayment, or the property's value as collateral. The total debt speaks to leverage, income level relates to repayment capacity, and the appraised value concerns collateral value, not the borrower’s own funds invested.