How to Qualify for a Home Loan

Video Transcript

"This is financial adviser Patrick Munro talking about how to qualify for a home loan. Qualifying for your home loan is basically a multifaceted task. First off your home must be appraised and the value of it must equate to the purchase price. Then the bank has a situation whereby you must have equity. You must have a down payment and normally it's ten percent of the value of the home. If the home is a two hundred thousand dollar home you then would have to have twenty thousand dollars of money to place down on your home and the balance would be by way of a mortgage. There can also be a second mortgage involved as well. To qualify each mortgage carries an interest rate and a payment thereof and your income on a monthly basis less your liabilities and your bills must be sufficient to pay that debt on the mortgages. And normally the gross debt service ratio for a home, relative to your income is forty percent. So in other words, if you make two thousand dollars a month, basically forty percent or eight hundred dollars would be the most that a bank would allow you to extend yourself out on a mortgage. With this in mind, qualification is important. It's Patrick Munro financial adviser talking about how to qualify for a home loan."