Increasing Your Mortgage Preapproval Amount

How to increase your mortgage pre-approval amount

An increase in your mortgage pre-approval amount can help you buy your dream home. If this dream is within your means, consider these strategies to help you increase your pre-approved amount.

Increase down payment

If you are able to make 20% push down, this choice can significantly increase the amount previously approved. That’s because this big down payment will eliminate the need for Mortgage Insurance.

Without mortgage insurance holding you back, more of your income could go directly toward principal and interest. In the end, a down payment of 20% may give you the payment you were looking for.

Debt repayment

When you apply for a mortgage, the lender will consider your account Debt to Income Ratio. Your DTI ratio is your total monthly debt divided by your total monthly income.

In general, mortgage lenders would like to see the debt-to-income ratio below 43%. Although you can qualify with a higher or lower DTI, a lower ratio is more favorable in the eyes of the lender.

So, if you have other outstanding debts, consider paying those debts before asking for pre-approval. If you free up a portion of your monthly income by paying off debt, you will be in a better position to take on a larger amount mortgage payment.

Raise your credit score

Credit scores are very important when you are a home buyer.

higher Balance level Can directly translate into a large amount of pre-approval. This is because a higher credit score can unlock a lower interest rate. With a lower interest rate, a greater portion of your income can go directly to the principal of the home loan.

Add co-borrower

If you can add a file co-borrower From your household, this is more likely to increase your total household income. As the income increases, you may be able to unlock a larger loan amount.

Consider additional sources of income

If you don’t have a co-borrower to add, there are other ways to increase your income on your pre-approval. Look at the details you originally provided to the lender. If you’re like most people, you probably submitted a W-2 and left it at that. But you may have other sources of income to consider.

Some of the additional sources of income that you can add to your app include:

All of these possibilities are legitimate sources of income. If you forgot to include this in your original application, feel free to add it.

Take advantage of a longer loan period

longer loan period It allows you to spread out payments, which can lead to a larger amount of pre-approval.

For example, a 30-year loan typically results in a higher loan amount than would be approved with a shorter loan term, such as a 15-year loan. This is because the monthly amount is less due to the spread of the loan over more payments.

If you are comfortable holding on to the loan for a longer period, this may be a good option. Know that long-term loans come with higher interest rates. You may have the opportunity to make additional payments to pay off the loan early.

Get additional quotes

Each lender has slightly different underwriting criteria. As a borrower, getting quotes from multiple lenders is a smart move. You can find the lender that will give you the highest pre-approval amount when shopping.

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