3 Factors Affecting Your Approval For A First-Time Home Loan


If you recently graduated from college and are looking to purchase your first home, then you need to understand everything you can about obtaining a home loan. To help you out, here are three important factors that can affect your ability to obtain a mortgage loan.

1. Your Student Loans Can Have a Big Effect on the Home Loan You Will Qualify for

While everyone probably encouraged you to get a higher education and take out student loans to pay for it, hopefully, someone along the way also warned you about the effect of their balance on your future home loan eligibility. If not, you might be surprised to learn that a high student loan balance can prevent you from being able to get a mortgage at all.

Student loans are considered debt and count when a mortgage company calculates what is known as your debt-to-income ratio. This ratio is calculated by comparing all of the debt you have to your income. If you have a lot of student loans and a low income, then this can be a show stopper. However, if you have a lower student loan balance and a high income, then the loans may not be a factor at all.

2. Buying a New Car Right Before Applying for a Mortgage Is Never a Good Idea

Just as student loans negatively affect your debt-to-income ratio, so will buying a new car. Even if you negotiate low monthly payments over a longer period of time, those payments will count against you and you will wish you didn't have them if you try to buy a house. Save yourself the hassle and the extra debt and wait to buy one until you are a homeowner and know what you can really afford. 

3. You Need a Proven Employment History to Obtain a Home Loan

If you just graduated from school and now have a fantastic income, you might still need to wait a year or longer before you will really be able to qualify for a home loan. Banks and other lending institutions need to be assured you will have the income month after month to make your mortgage payments. If you just started a new job, then this doesn't give them any reassurance you will still be there next year or the year after.

So, in conclusion, if you just started a new job, recently purchased a car, or have massive student loans you need to pay down, then give yourself some time before you try to obtain a home loan for maximum success.

For more information about home loans, contact a company like FCCU - First Community Credit Union.


11 October 2019

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