Posted: 6 Jan '17

The Top 5 Reasons You May Not Qualify For A Mortgage

At Dominion Lending Centres in Edmonton, we’re more than your standard mortgage brokers – we’re your mortgage mentors.  After being turned down by a financial institution or bank, Edmontonians often turn to us when they don’t understand the reasons why. With that in mind, here are the five biggest reasons you may not qualify for a traditional mortgage.

Reason #1: No down payment or insufficient equity for refinancing.

To qualify for mortgages in Edmonton, you must pay a minimum down payment of 5-percent. If you're looking to refinance your mortgage, you must have at least 20-percent equity in your home. Don’t fall for gimmicks or cash-back options to work around this. The only exceptions are to have the down payment gifted from a family member or have strong enough credit that the bank will allow you to borrow it from them. If these options are not possible, Dominion Lending Centers can help you figure out your options.

Reason #2: Not enough income to support the mortgage.

When applying for a mortgage, you may feel your income is adequate to make your payments. However, property taxes, cost-of-living expenses, and debts must also be taken into consideration. Banks and lenders take these factors into account and weigh them through something called your debt ratio, and there are limits on what your debt ratio can be. In a situation like this, your mortgage professionals with Dominion Lending Centres in Edmonton may be able to provide you with alternatives or offer advice on how to qualify.

Reason #3: New regulations cutting more people out of the home ownership loop.

New regulations have been established for mortgage qualification in the wake of the 2008 financial crisis, including those implemented recently in October of 2016. To ensure people in Edmonton don't fall into similar situations resulting in foreclosures, mortgage borrower’s debt ratios are stress tested at higher rates and amortization periods have shortened. Even if you have good credit, these new rules can stop you from qualifying for a mortgage. We can help you figure out how the rules apply to your situation.

Reason #4: Black marks on your credit report or low credit scores.

Your credit report is the main source of information lenders have to see how you handle credit and whether or not it’s a priority. While non-payment and collections hurt you the most, you may not realize that even late payments can affect you. Most credit card or loan companies will report late payments in as few as three days, but only after you are more than 30 days late. Basically, it is important that you make a payment within each billing cycle. Additionally, there are other factors that can bring down your credit score. Responsibly managing your credit and working to repair bad credit is paramount to qualifying for a mortgage in Edmonton.

Reason #5: Your debt load is too high.

Credit cards, new vehicles, and consumer loans can work against you when you are applying for mortgages in Edmonton. If your consumer debt load is too high, the debt ratio that lenders use will be above the allowable limit. This means that the lenders are assuming you can't afford to pay for a home due to your debt load and your mortgage application will be turned down.

Your mortgage professionals of Dominion Lending Centres in Edmonton can help most people seeking mortgages. If you are turned down by your financial institution, we invite you to contact us for a consultation. If we can't help you right now, we can get you on track to qualify sooner than you may think!

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