How to Get an Underwriter to Approve a Mortgage
Underwriters approve mortgages from borrowers who have a strong income, good credit score and low amount of debt. If you have all of this, you'll have little trouble getting mortgage underwriters to approve your loan application.
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Things You'll Need
- Copies of your last 2 years worth of federal income tax returns
- Copies of your 2 most recent paychecks
- The amount of debt you owe on all your credit cards
- The amount of debt you owe on student, car and other loans
- Copies of your retirement savings account statements
Instructions
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Hold a steady job. Underwriters like to see that their borrowers have worked in the same position for at least two years. This shows them that you have a stable income.
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2
Make far more money than you owe. Mortgage underwriters are more likely approve your loan application if your debt-to-income ratio is 28 percent or less before you take on a home loan. When you add a new home loan to the mix, underwriters prefer that your debt-to-income ratio stands at 36 percent or less.
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3
Cut down your debts. Underwriters don't like to see borrowers with large amounts of credit card or other revolving debt. They view borrowers plagued by high credit card debt as more likely to default on their loans.
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Have a good credit score. You can build a good credit score by paying your bills on time, closing extra credit card accounts, cutting down on your debt and avoiding financial disasters, such as bankruptcy. Underwriters rely heavily on credit scores--720 and above is considered to be top scores--when approving loan applications.
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Bring a large down payment to the table. The more money you put down on a home, the smaller your mortgage will have to be. Underwriters view a large down payment as more proof of your financial stability.
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Tips & Warnings
If you have a low credit score or too much debt, you may still qualify for a subprime loan. But your loan will come with higher monthly interest rates. It might make more financial sense to wait a year or more to build up your credit score and cut down on your debt.
Don't stretch yourself financially. Your mortgage lender may approve you for a higher monthly mortgage payment than you feel comfortable paying. Never take out a loan that you might struggle to pay each month in an effort to get into a more expensive home.
