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The Steps To Getting Approved For A First Time Mortgage

Posted on May 28, 2015 by Earl Raatz

How to get approved for your first mortgage.

Buying a home for the first time is an exciting—but daunting—task. If it’s your first foray into the world of homeownership, you may not know the best place to start.

You will probably need a mortgage to make your purchase. In order to secure a mortgage, you will need to first get approved.

Before you head out house hunting, you should have pre-approval for a mortgage. That way, you know exactly what you can afford and can look at homes realistically in your price range.

Getting Pre-Approval

Pre-approval isn’t solid approval for a mortgage—but you won’t be able to get solid approval before you put an offer in on a house. Pre-approval is the bank or mortgage broker letting you know how much you should be approved for given the details of your finances that you provided.

The first step to obtaining a pre-approval is to visit your bank or mortgage broker. Whether you choose to go through a bank or a mortgage broker is up to you—you may choose to go through your bank if you have a long-standing relationship with them and like the mortgages and rates they are offering. If you don’t think that your bank is offering the best rates, you could seek out a mortgage broker and find out what they have on offer.

Know your numbers.

Once you set an appointment with your bank or broker, you will need to have some numbers ready for them. Know how much your paychecks are. Have a solid number for any debts you have. Know how much your assets are worth—cars, stocks, properties, etc. Your mortgage specialist will need to know all aspects of your finances in order to calculate how much you will be approved for. Also be ready for your credit score to be pulled.

Gross Debt Service Ratio

Your mortgage specialist will do a calculation based on the information you provide. This calculation will determine your Gross Debt Service Ratio. Normally, housing costs shouldn’t take up more than 32% of your gross monthly income and your entire monthly debt load shouldn’t exceed 40% of your gross monthly income.


A pre-approval will be determined based on your finances and credit. This pre-approval will let you know how much your lender thinks you will be approved for once you make an offer on a house. A pre-approval will also guarantee you a certain interest rate for a set length of time.

You’re all set!

Once your lender lets you know how much you are pre-approved for, you have a maximum housing budget. This does not mean you need to spend everything your lender is willing to give you. Make a monthly budget and ensure that housing costs won’t put stress of the rest of your finances. Next stop, house hunting!

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