As you prepare for homeownership, it is beneficial to become familiar with requirements necessary to qualify for a
mortgage.
Mortgage payments are paid over an extended period and give potential homeowners the ability to find and pay for the
home of their dreams. Knowing how to qualify for a mortgage allows you to line everything up to get the funds needed
for your desired home.
Mortgage income requirements
Even though potential homeowners of all income levels can apply for a mortgage, a few key financial factors can make
or break your mortgage loan qualification.
Having a well balanced debt to income ratio demonstrates you have enough funds after paying off monthly debts such as
credit card payments, to comfortably afford a mortgage. A ratio of 36 percent or lower is considered most ideal to
lenders.
Next, your gross monthly income should be steady and expected to be received for at least the next 3 or more years to
demonstrate financial stability. This too demonstrates to lenders you can afford a monthly mortgage payment.
Collateral & mortgage loan eligibility
Sometimes, to qualify for mortgage approval, lenders require the loan borrower to put down collateral that can be
seized if the loan is not paid back in terms of the mortgage contract. For mortgage loans, the collateral would be
the home itself.
As you prepare to apply for a loan, it’s essential to manage your debt which boosts your credit history in the eyes
of lenders. Your new home is a large asset, so before applying for a mortgage, consider speaking with a lender near
you to answer any questions you may have.
