The Better Way To Get A Mortgage | QuestMortgage (2024)

FAQs

How do you increase your chances of getting approved for a mortgage? ›

To increase your chances of mortgage approval, consider improving your credit score, minimizing debt, having a stable income and employment history, and saving for a down payment. Getting pre-approved before house hunting can also strengthen your offer.

So, what do lenders look at when deciding to approve or deny an application? Lenders consider four criteria, also known as the 4 C's: Capacity, Capital, Credit, and Collateral. What is your ability to pay back your mortgage?

There are a few basic steps you can take to boost your chances of approval for a home loan. One is to reduce your debt-to-income ratio by paying down structured debts, like car loans, and limiting your credit card usage. Another is to save up a larger down payment.

Increasing your income, paying down debts, and boosting your credit score can all help lower your risk as a borrower and qualify you for a lower mortgage rate. You can also save up for a larger down payment, as it means the lender has less cash on the line.

In addition to your monthly income from wages earned, this can include social security income, rental property income, spousal support, or other non-taxable sources of income. Your work history: This helps lenders understand how stable your income is and how likely you are to repay your mortgage.

Making late payments, even a single day late, can significantly affect your credit. This becomes especially true if you make a habit of paying late. Some lenders or credit card companies will charge you a fee for being a single day late and could cut you off from making further purchases on the account.

A 20 percent down payment may be traditional, but it's not mandatory — in fact, according to 2023 data from the National Association of Realtors, the median down payment for U.S. homebuyers was 14 percent of the purchase price, not 20.

If a borrower has no other debt obligations, a conforming loan for a $250,000 property with 10% down in a 7% rate environment would require a gross monthly income of approximately $3,870, factoring in a 50% debt ratio. This translates to an annual salary of around $46,450.

Who is the easiest mortgage lender? ›

Buyers who want to buy a home with a low credit score should consider an FHA loan backed by the Federal Housing Administration (FHA). The most widely available government-backed loans are FHA loans. There's a common misconception that FHA loans come directly from the government, but they don't.