Qualifying for a Mortgage

Buying a new home can be both exciting and intimidating. You must decide on a location and a price range, shop for the home of your choice and make an acceptable offer before you can close the deal and move in. However, before you can do any of these things, you should make sure you can qualify for the mortgage you need.

To qualify for a mortgage, you must show the lender that you have sufficient income from a stable source. For a conventional mortgage, most lenders require that your total monthly debts be no more than 36 percent of your gross monthly income. They also require your monthly mortgage debts to be less than 28 percent of your gross monthly income. Some lenders may stretch these limits in special circumstances, but these are the general guidelines.

Even if you have enough income to qualify for the mortgage you want, most lenders will still consider your credit history before approving your application. If your credit score is above 650, there is a good chance that the lender will grant you the mortgage. However, if your credit score is below 650, you may have to provide more information about the negative entries on your credit report.

If you don’t qualify for the mortgage you want, you may still be able to borrow a smaller amount of money. If you have already chosen a home, however, failing to qualify for a sufficient mortgage can be devastating. For this reason, many potential buyers choose to obtain a preapproval, which is a promise from a lender that guarantees you a loan of a certain amount, before they view any homes.