Lenders will take a close look at your eligibility for a mortgage

What lenders look for

It feels like the spring housing market is off to a brisk start.

I have had lots of calls over the last few weeks from people who are looking to get pre-qualified before they go shopping for a home.

Whether you are a first-time homebuyer or it’s been a while since you last went through the home-buying process, I encourage you to reach out to a mortgage professional to make sure your budget meets your expectations.

There are three basic things that lenders look at when deciding whether or not to approve your mortgage application:

• Capacity – Your ability to repay your mortgage.

• Collateral – Do you have adequate funds available for your down payment?

• Character – Does your credit history reflect a pattern of paying your bills on time?

Lets dive into each of these a bit.

When lenders look at your capacity to repay your mortgage, they are looking to see not only how much you earn but how that income is generated. (ie: salary or commission, self-employed, seasonal, casual, part-time or full-time)

They are also looking at how long you’ve been with your current employer. Do you change jobs frequently or have you been with the same employer for some time?

Next, they will look at not only how much you have available for your down payment but also the source of your down payment funds. Have you been planning to buy for a while and had a savings plan in place? Are you using funds gifted from your family? A combination of the two?

With respect to your credit history, at a minimum, lenders are looking for a two-year history of repaying at least two credit facilities. Credit facilities can include: credit cards, lines of credit, a car loan or even your cell phone bill.

Lenders will be looking to make sure that you make your payments on time every month. They are also looking to see how you manage revolving credit (something you can pay down then use again like your credit card or line of credit). Do you have everything maxed out? Or do you pay them off in full every month?

If you’d like more information about what goes into getting a mortgage pre-approval in place, check out one of my previous blog articles Know What You Can Afford.

With the limited inventory of homes available right now, spending the time upfront to make sure you are organized and know what you are qualified to borrow will save you time, energy, and stress.

And, as an added bonus, your realtor will love knowing that you are working with a professional.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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