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Did you know that nearly 40% of American houses are now mortgage free?

Most of us need a mortgage to get out of the housing market, but if you do your research and set yourself up properly now, you’ll be able to pay yours without hassle! Using the right tips, you could join those 40% of mortgage-free homeowners sooner than you think.

As a first time buyer, though, the mortgage market can be overwhelming. If you’re not sure what you’re doing or how to get a mortgage that’s right for you, we’re here to help.

Check out our tips to qualify for a mortgage for everything a first-time buyer needs to know.

1. Find Out Your Credit Score

First up is your credit score. Your credit score is a rating that uses factors like how much debt you have, how many payments you’ve missed, and whether your utility bills are paid on time to give you a numerical score. The better your score, the more likely you’ll be to secure a mortgage and buy a home.

In the US, a fair credit score is anything from 580 upwards. A score of 670 and up is considered good, 740 and up is very good, and if you have anything about 800 then you’re doing incredibly well! You can find out your credit score with online tools to get insight into how you’ll look in the eyes of lenders.

But, why bother? Your credit score plays a big part in your mortgage. Not only can you be rejected by lenders if your score is too low, but you’ll also pay more interest on a mortgage you do get the lower it is.

If your score is low, don’t worry! There are ways you can help boost it, such as taking out a credit card designed to help users improve their credit scores.

2. Find Out How Much You Can Borrow

No one can borrow as much as they want, so when you’re looking to secure a mortgage make sure you have an idea of how much your lender will be willing to give. This is calculated based on two different factors.

Firstly, lenders will ensure that your monthly payments are no more than 28% of your income before tax. This includes taxes involved and insurance. You can check out how much you’ll need to pay off using online mortgage calculator tools which should give you an idea of what you can afford.

Secondly, the total amount of debt that you have shouldn’t exceed 36% of your income before tax. This includes your monthly mortgage payment. If you have a lot of existing debt, it’s a good idea to pay a large amount of it off before you get a mortgage.


Of course, you can find lenders who will use different ratios and be more lenient with how much you can borrow. However these ratios are for your own benefit to ensure you don’t get into trouble paying your mortgage repayments, so be careful!

3. Learn How Not to Overextend

If you have a credit card with a $50,000 limit, would you spend the lot? Absolutely not! It’s the same with mortgages.

Just because you qualify to receive a certain amount of money doesn’t mean you should. Make sure that your mortgage fits into your monthly budget and isn’t going to cause unnecessary stress. It’s far better to borrow less and have to pay less back.

You also need to consider other expenses when taking out a mortgage, such as closing costs, taxes, and insurance. Will you be able to afford these on top of your monthly repayments?

4. Consider the Mortgage Options Available

There are plenty of mortgage options out there to suit a variety of buyers. Look into what’s available to you to get a better idea of the right choice. For example, you might find going with an alternative lender or picking an FHA mortgage is a wise choice as you have a poor credit score.

Consider how your mortgage will be structured, too. A 15-year mortgage is becoming a popular option for those who can afford to pay a little extra monthly or are willing to buy a cheaper home in order to pay it off quicker. Or, stick with a more traditional 30-year mortgage and buy a more comfortable home.

With so many choices out there, take your time to research each one before making a decision.

5. Prepare Your Documentation

When applying for a mortgage, there’s a lot of documentation you’ll have to have to hand. Lenders need proof that you’re a suitable client. Gather your documentation together before you begin communicating with a mortgage company to prevent any stalls.

Documentation needed includes:

  • Up to date tax returns
  • Payslips
  • Bank statements
  • W-2s
  • Social security card
  • Drivers license

6. Choose a Good Mortgage Company

There’s isn’t just one single mortgage company out there, so be sure to shop around before picking the right one for you! Every mortgage company offers different interest rates, maximum loans, and provides a slightly different service style, so communicate with a range of lenders before picking one you feel comfortable with. Take a look at reviews for the company before you commit, too.

It’s also important to note that if you’re rejected by one lender, that doesn’t mean you’ll be rejected by all of them. Every mortgage company has different requirements so keep trying until you find one that you qualify for.

7. Get Pre-Approved

You don’t need to have pre-approval for a mortgage before you start house hunting, but it is a smart idea. Pre-approval is when a lender writes you a letter that documents how much money you’d be authorized to borrow for a mortgage. Not only does this give you the peace of mind that you’re looking at houses you can afford to purchase but it could also give you a competitive edge when it comes to securing your dream home.

Discover More Tips to Qualify For a Mortgage

These tips to qualify for a mortgage should help you borrow the money you need with ease. Now it’s on to the house hunt!

For more help finding your dream property, be sure to check out our Home Buyers Guide created by professional realtors, or get in touch with our experienced team today.

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