Income verification is important because it helps lenders determine a borrower’s ability to repay the loan. The lender uses the borrower’s income information to calculate their debt-to-income ratio. It measures how much of the borrower’s income will pay off debts. It indicates they are at a higher risk of defaulting on the loan if a borrower has a high debt-to-income ratio. Additionally, income verification helps lenders ensure that the borrower is not over-extending themselves financially and that the loan amount is affordable. It is important for compliance with laws and regulations for lending.