There are a lot of variables that are considered by the underwriter evaluating your mortgage application. A strong file scores highly in all categories, obviously…. but underwriters do have some discretion to grant exceptions to many of the rules. A small weakness in one category can be offset by strengths in others. A skilled mortgage broker will be able to present your application in the best light possible and know which guidelines are hard-and-fast, and which are not.

Here are some of the factors considered by lenders when considering your mortgage application:

Income and Debts: Your income determines how much you may borrow, but it is also considered relative to your other unsecured debts. A guideline is that about 30% of your gross income is the maximum that can be used towards your mortgage payment, and about 40% of your gross income is the maximum that can be used for all minimum debt payments combined (credit cards, student loans, car payments, etc.). Your mortgage broker will take a full application and provide you with an exact maximum based on your situation.

Stability: The longer you have been at your existing job, the better. If you are thinking about a career change, and you’re also thinking about applying for a new mortgage, get the new mortgage first! A stable job history goes a long way to reassuring the lender that you will continue to be employed. It is usually not possible to get a mortgage while you are still on probation.

Appraised Value: The lending value of the home you are purchasing is either the purchase price or the appraised value, whichever is LESS…. this can be a bit surprising for many buyers.

Down Payment: It goes without saying that the bigger the down payment, the higher the lender’s comfort with your application. Mortgage applications with the minimum 5% down payment need to be very strong….. if there is anything to make the underwriter uncomfortable, they may come back with a suggestion to increase the amount of the down payment. The loan as a proportion of the purchase price is called Loan-To-Value. Lenders also care where the down payment is coming from and will request documents to confirm it’s origin. Down payments from own resources are viewed more favorably than those gifted by a family member.

Credit History: Your credit score must reflect that you pay your bills on time. There are minimum requirements from best-rate lenders, and if you have a weak credit history, you may not qualify for insured financing (mortgages with less than a 20% down payment). If you have any collection items, the lender may insist that you pay them out before approval. If your credit is ‘bruised,’ speak with your mortgage broker for lousy credit about the most efficient way to raise your score.