Owning your own home is a beautiful goal that everyone wants to achieve in life. You’re probably wondering how you can qualify for a mortgage if you don’t have a lump sum of cash to put down on a home at the moment. The following are some of the qualifications you’ll need to meet before you conduct your search.
A Positive Credit Score and Report
You have to meet credit requirements before getting a mortgage company to finance you for a Calgary SW home. You’ll want to have a credit score of at least 600 points to qualify for a mortgage. Even then, you run the risk of receiving a denial if the prospective lenders see anything else that might look unfavorable. You can work on your credit score before you search for homes, however. Take some steps such as paying down your debt and disputing strange-looking accounts. You might be able to get a small boost if you do that.
A Low Debt-to-Income Ratio
Even if you have a decent credit score, the prospective lenders will look at your debt-to-income ratio. They’ll review the amount of debt you have and compare it to how much income you reported. You may have trouble getting approved for a mortgage if your DTI is more than 45 percent. Fortunately, you can take steps to reduce your DTI now by paying down as much debt as possible. You may want to double up on some of your credit card payments. That will help you succeed.
A Decent Down Payment
Almost all mortgage lenders will require you to provide them with a down payment. The rule of thumb is to have at least 10 percent of the purchase price of the home you want to buy. For example, you should have a $10,000 down payment if you want to buy a $100,000 house. In some cases, the lender will allow you to put only 5 percent down. You may even get lucky and only have to put down 3 percent. You’ll still need to have extra money for closing costs and additional fees that might appear.
Documents for the Past Two Years
You will need to show the mortgage lender documents to prove that you worked and lived in the same place for a significant time. They’ll also want to see that you paid your utility bills and other bills in a timely fashion. Try to gather your paperwork for the past two years before you meet with the mortgage company.
A Stable Job
You should have a stable full-time job when you apply for a home, and you should have documentation to prove that you’ve been on the job for a least two years. The mortgage company will want to be sure that you can make your payments and will not lose the home in a short amount of time.
You can search for a home the moment you meet all the necessary qualifications. You will find something that you’ll love, and you will be a new homeowner before you know it.