A home purchase is one of the most significant financial decisions you'll ever make, so it's worth taking your time and being prepared for the mortgage process.
Starting early helps you avoid the small, avoidable mistakes that can hurt your application. Here are some of the most common errors people make when qualifying for a mortgage — and how to steer clear of them.
1. Having too much debt
Credit card balances and overused lines of credit can push your total debt-servicing ratio (how much you owe versus how much you earn) past the limit, making financing impossible. Some homeowners carry so much consumer debt they can't even refinance to consolidate it. Before you start shopping, make sure your current debt is under control.
2. Not checking your credit history
Your credit history plays a major role in how a lender views your creditworthiness. Good credit earns favourable rates and terms; a low score compromises them. Whatever your score, be honest about it so the lender can properly consider your request.
3. Too small a down payment
One of the worst mistakes is not putting down enough. While "20% down" is often treated as the standard, most people don't actually put 20% down — but saving toward it where you can helps you avoid paying mortgage default insurance.
4. Insufficient income or assets
Lenders review your employment, investments and other income to confirm you can comfortably make the monthly payments. With many loans they're legally required to assess your ability to repay, and an application can be declined if your income can't be verified or doesn't stretch far enough.
5. Inadequate employment history
Employment is one of the most decisive qualifying factors, so avoid changing employers mid-approval. Lenders like to see a longer tenure as a sign of stability — it's best to hold off on any major career change until after your mortgage is approved and the keys are in your hand.