A Guide to Apply for a mortgage

Mortgage loan eligibility

A lack of financial stability not only can that make budgeting and saving money difficult, but it can also make it tough to qualify for a mortgage when you’re ready to buy a home.

Be prepared to offer up proof of income

When you’re a salaried worker, proving that you earn enough money to keep up with your mortgage is easy — you just show prospective lenders a copy of your pay stubs or Tax form.

When your income is variable, it’s a lot harder to convince mortgage lenders to take a chance on you. But you’re more likely to get approved for a home loan if you show proof that you’ve been earning money steadily for years.

Make sure your credit is solid

The more trustworthy a borrower you appear to be, the greater your chances of getting approved for a mortgage. you’ll really need strong credit to prove that despite your variable income, you’re able to keep up with your bills

 You can do so when you’re able to

• Paying incoming bills on time.
• Paying off some of your existing revolving debt (namely, credit card balances).
• Checking your credit reports for errors (and correcting any mistakes you find).

Save for a sizable down payment

The more money you put down on your home, the less risk your lender takes on. If you’re able to come up with a down payment of 20% or more you’ll also send the message that despite your non-steady income, you clearly have a respectable level of cash reserves.

Keep your debt-to-income ratio low

Your debt-to-income ratio is a measure of how your outstanding monthly debts relate to your income, and the lower that number is, the greater your chances of getting approved for a mortgage.

If you have outstanding credit card balances to pay every month or a large auto loan in your name, knocking out some of that debt could bring your DTI into much more desirable territory, thereby increasing your chances of getting a mortgage.

 Know what you can afford

You may qualify for a certain mortgage based on your earnings history, credit score, down payment, and DTI

Take a look at your earnings history, and be mindful of the ebbs and flows of freelance income. A good rule of thumb is actually to assume the worst when it comes to your future earnings potential.