3 Key Factors That Can Make or Break Your Mortgage Application
3 Key Factors That Can Make or Break Your Mortgage Application
If you’re planning to buy a home in Columbia, MO or the surrounding areas, one of the most important steps is securing your mortgage approval. The process may seem intimidating, but understanding what lenders look for can make a big difference—and help you move smoothly from house hunting to home-ownership.
Whether you’re searching for a home in Fulton, Ashland, Rocheport, Hallsville, or nearby communities, knowing the key factors that impact your mortgage approval is essential. Here are three major considerations that can make—or break—your application:
1. Debt-to-Income Ratio (DTI)
Your debt-to-income ratio measures how much of your monthly income goes toward paying existing debts. Lenders use this number to determine whether you can afford a new mortgage alongside your current financial obligations.
How to calculate your DTI:
Add up your total monthly debt payments, including credit cards, student loans, auto loans, and other obligations.
Divide that total by your gross monthly income.
Multiply by 100 to get your DTI percentage.
Most lenders prefer a DTI of 40% or lower. If your ratio is too high, it could affect your mortgage approval. To improve your DTI, focus on paying down high-interest debts and avoid taking on new credit while applying for a mortgage.
2. Credit Score
Your credit score plays a significant role in both mortgage approval and the interest rate you’ll receive. Higher credit scores can help you secure better rates and loan terms, while lower scores may result in higher monthly payments—or even disqualification for some loans.
Tips to strengthen your credit score:
Always pay bills on time.
Keep your credit utilization below 30%.
Avoid opening new lines of credit during the mortgage process.
A strong credit profile demonstrates reliability to lenders and can save you money over the life of your loan.
3. Employment Stability
Lenders want to see a steady employment history with consistent income. Significant changes during the mortgage process—such as switching jobs, changing careers, or starting a brand-new field—can impact approval.
Maintaining stable employment reassures lenders that you can reliably repay your mortgage and strengthens your application.
Set Yourself Up for Mortgage Success in Columbia, MO
Understanding these three key factors—DTI, credit score, and employment stability—can help you feel confident and prepared during the home-buying process.
If you’re ready to purchase a home in Columbia, Fulton, Ashland, Rocheport, Hallsville, or surrounding areas, I’m here to guide you every step of the way.
Before you list, take a critical look at your home, or better yet, get some help from your friendly neighborhood agent!
