What buyers should know


To qualify for a mortgage, you usually need to meet certain conditions. On the one hand, you will need:

  • A sufficiently strong credit rating
  • A reasonable and not excessive level of existing debt
  • A stable job
  • Funds for a down payment

Many mortgage lenders have tightened their borrowing requirements during the pandemic. After all, mortgage lending comes with risk, and lenders need to make sure they are working with borrowers who are likely to continue to pay off their home loans.

In May, mortgage lenders eased their borrowing requirements and credit availability increased from what it was in April, according to the Mortgage Bankers Association. This made it a bit easier to qualify for a mortgage. But in June, the availability of mortgage credit fell 8.5%.

If that percentage sounds like a lot, well, it is. The mortgage loan availability level in June is the lowest since September 2020. This could make buying a home more difficult in the short term.

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How to give yourself a better chance of getting a mortgage

Just because the availability of mortgage credit declined in June doesn’t mean your chances of borrowing are ruined. If you are a good candidate, you may not have any trouble getting approved for a home loan.

However, there are steps you can take to increase your chances of getting approved before you apply for a mortgage.

1. Improve your credit score

Your credit score indicates how trustworthy you are. Typically, you need a minimum credit score of 620 to get a conventional mortgage. But now that lenders are getting stricter, a score of 620 may not be enough.

It pays to work on increasing your credit score. A better score not only increases your chances of getting approved for a mortgage, it can also help you earn a low interest rate. You can increase your credit score by:

2. Get rid of your debt

Your debt-to-income ratio is another metric used by lenders to determine if you qualify for a mortgage because it measures your existing debt relative to your income. If your ratio is high, it sends the message to lenders that you are already spending a large portion of your income on debt securities and may not be able to cope with a mortgage if you are approved for one. Paying off debt is the best way to lower this ratio.

3. Make sure you have a solid deposit

The more funds you have for a down payment on a home, the less you will need to borrow. And the less you borrow, the less risk mortgage lenders take. It might pay off to start side work for a few months. This way you can use your earnings to help you save for a down payment.

While lenders got tougher with borrowing requirements in June, that doesn’t mean your mortgage application will be turned down. At the same time, it’s worth doing whatever you can to increase your chances of getting the loan you want and at a rate that makes it easier to manage your monthly payments.


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