5 Tips to Get Pre-Approved for a Higher Loan Amount

Getting pre-approved is a crucial first step when buying a home. It tells you how much you can spend on a home between your down payment and the approved loan amount. Sometimes, though, the pre-approval amount is lower than what you expect, throwing a wrench in your plans. 

Here are five ways to increase your pre-approval amount if this happens to you.

1. Lower your Debts

Your debt-to-income ratio measures your outstanding debts to your monthly income. If the percentage of your committed income is too high, you might not qualify for the mortgage amount you want.

Before applying for a mortgage, try paying your high-interest consumer debts down or off if you can. This will likely increase how much you can afford in a mortgage, giving you a higher pre-approval amount.

2. Increase your Credit Score

Lenders dive deep into your credit score & repayment history when pre-approving you for a loan. Therefore, you might not qualify for as much as you hoped if you don’t have a fair or good credit score.

Before applying for a loan, check your credit and determine where to make changes to increase your score. Consider bringing any late payments current and lowering your outstanding credit card debt to decrease your credit utilization rate as a couple of first steps

5 Tips to Get Pre-Approved for a Higher Loan Amount

3. Change your Mortgage Terms

Sometimes, the mortgage terms make your pre-approval loan amount lower than you’d like. For example, variable rates are currently higher than fixed rates. With the Stress Test, you would currently qualify for less if choosing a variable rate. Work with your Mortgage Broker to see which loan offers the best options for your situation.

4. Make a Larger Down Payment

If you have more capital saved, consider putting it down on the home. A larger down payment means you need to borrow less from the lender, and they may be able to approve you for a higher purchase price.

If you don’t have the money saved, consider a gifted down payment from family or a government assistance proram, such as the First-Time Home Buyer Incentive.

5. Find a Co-Signer

If you have close friends or family with great credit, consider asking them to co-sign your mortgage. It’s best to ask someone with a high income and low debt who can add to your capability, but use caution. When someone co-signs your loan, they are as financially responsible as you for the payments.

5 Tips to Get Pre-Approved for a Higher Loan Amount

Final Thoughts

Getting pre-approved for a higher amount is possible; it just may take a little work and time. However, before requesting a higher amount, ensure you can afford the higher payment. The more you borrow, the higher your mortgage payment will be. Even if you’re approved for your max amount, it’s a good idea to complete an in depth budget sheet to ensure you can afford the expenses outside of your new home. 

Think about how much you can afford and if your pre-approval doesn’t match that amount, figure out what you can fix to get the desired amount. It may take a little more time or effort, but in the end, you’ll be capable of buying your dream home.

Browse More Blog Posts

Debt Consolidation Through Mortgage Refinancing

Are you tired of feeling like you’re constantly playing catch-up with your finances? The struggle with debt can often feel like an April Fool’s prank that never ends. But fear not, because there’s a strategic move you can make to turn the tables on your debt – debt consolidation through mortgage refinancing.

Read More »
Exploring Shared Homeownership: Buying a Home with Friends and Family

Exploring Shared Homeownership: Buying a Home with Friends and Family

In today’s real estate landscape, more people are turning to joint homeownership as a solution to rising prices and interest rates. This involves teaming up with friends or family members to buy a home together. While it sounds appealing, it’s crucial to approach this decision with careful thought and planning to ensure a positive experience.

Read More »

A Self-Employed Guide To Buying A Home In 2024

If you’re self-employed, you’re likely aware of the challenges that can arise when applying for financing. Make sure to mark March 15th on your calendar – it’s a date that could make all the difference in your homeownership journey. Let’s dive into a crucial tip to ensure a smooth ride through the mortgage process.

Read More »

Mortgage Features Vs. Lowest Rate

Securing a mortgage is a significant step in the journey of homeownership, and understandably, many people initially focus on securing the lowest interest rate possible. While securing a low rate is important, it’s equally crucial to delve into the fine print and understand the various features that accompany mortgage deals.

Read More »

Why You Need Fire Insurance When Getting A Mortgage

Today, let’s delve into a topic that might not be the most glamorous but is absolutely crucial when it comes to your mortgage in Canada – Fire Insurance. So, grab a seat and let’s break down the why, how, and what to expect of this essential safeguard for your home.

Read More »

The Hidden Benefits of Home Inspections in Real Estate

Embarking on the journey to buy a home is undeniably thrilling! Yet, amidst the excitement, there’s a crucial aspect you shouldn’t overlook – a house check-up, professionally known as a home inspection. Let’s delve into why this process is pivotal and how it empowers you to make informed decisions.

Read More »

Leave a Reply

Your email address will not be published. Required fields are marked *