People always dream about owning their own homes or cars. Some find a house in a location they want to settle in after retirement. They list different houses to choose from yet they always end up choosing the one that may be a little more expensive but very comfortable to live in. In the end, they strive to improve their mortgage loan application to be granted a higher amount.

What do you need to do to get approval for a higher mortgage loan?

In order to get approval for any loan application, a person’s credit scores must be good. The applicant must possess some assets or find work that pays well in order for the creditor to know that you will be able to pay them back.

#1 Improve your credit score and strive to obtain a lower rate from creditors

Every creditor determines interest rate through the FICO score. Paying debts and dues on time is a good way for applicants to raise their FICO score. This results in getting a lower interest rate from creditors.

When you own a credit card and use it to pay bills, it affects your credit score. Paying your dues on time increases your FICO score and makes obtaining approval for the highest loan amount with the lowest interest rate possible.

#2 Find a more affordable property

When people set their minds on something, they do everything to acquire it. This is especially true for properties, as some villas cost more than a townhouse or a condo unit with fewer amenities, bedrooms, and bathrooms. Some properties are located in a neighborhood far from prime locations. However, some choose a different part of the country to find a more affordable home.

If your finances improve, you may put up your property up for sale and attempt to acquire a property that you hope to own.

#3 Pay at least 20% down payment

In estimating a mortgage loan, some mortgage insurance companies require a loan-to-value ratio of more than 80%. This does not happen if the debtor pays a 20% down payment. Some private mortgage insurance (PMI) costs at least 1% of the loan, which in turn, costs you at least a thousand dollars annually.

For aspiring homeowners, make sure to save at least 20% down payment to refrain from paying PMI. Paying 20% down payment saves you thousands of dollars, helps you avoid expensive mortgage insurance and lets you have the home you desire.

#4 Find someone to co-sign the loan

Some do not earn enough income to afford a loan. It’s best to find someone to cosign it who possess enough income. A portion of their income contributes a significant amount that may actually get you through the monthly amortization. A consigner may also compensate for your credit score. Moreover, the cosigner becomes the guarantor in case you have financial challenges during the loan.

One thing about finding a cosigner is to make sure they understand the terms and conditions of the loan. Make sure to understand the legal obligations with the mortgage. Understand that when you default on the payment, the creditor asks payment from your cosigner. The creditor may ask for the full amount of the loan and this affects both of your credit scores.

You need to remember to manage your finances wisely, especially if you’re self-employed. Be sure you and your cosigner make the monthly payments on time.

#5 Wait until the economy gets better

As time goes on, different states of the economy affect the housing market and creditors in the lending business. If the economy encounters a plunge, creditors are more generous about loans and this may come in your favor. However, over time, the economy improves and it may be best for every borrower to continue saving and purchase the property when the economy is better.

During the waiting period, borrowers need to remember to improve their credit scores, pay off their debts, and save money. Also, carefully observe how the prices of different properties change and the signals for when to start asking realtors and canvassing the property you want.

#6 Find other sources of income

Another way to improve your credit score is to find another way to earn money. Some do freelancing to help them earn more aside from a day job. This way, it keeps you afloat with monthly dues as well as the amortization for your new property.

Other income sources that creditors consider:

  • Child support
  • Car allowance
  • Income from part-time jobs or freelance work
  • Cash tips
  • Royalty payments from published works
  • Social security income
  • Trust income
  • Interests and dividends income

#7 Search for different lenders

Some creditors reject a borrower’s application, and it usually happens to the first creditor that a borrower approaches. Don’t feel discouraged about it as a number of other options exist. However, if the second creditor that you approach rejects your application, something is wrong with your finances and credit score. Make sure to check this first before approaching another creditor.


When searching for another creditor, refrain from showing signs that you’re desperate for a loan. This signals them to give you higher fees, interest rates, and a shorter period to pay the loan. Moreover, things change if you’re a high-risk borrower as fees may not bother you at all.

Realizing that your dream home is closer than expected, that’s the time to find a creditor. If you need more help with mortgage loan approval, consult Calcite Credit Union now.