Income and Employment Stability
Lenders want to see consistent, verifiable income and stable employment history, generally looking at your most recent two years. Frequent job changes or gaps can raise questions, though they are not always disqualifying if well explained.
Credit History and Score
Your credit score and history of on-time payments give lenders a sense of how reliably you manage debt. A strong score can open up more lender options and better terms.
Debt Levels and Ratios
Lenders calculate how much of your income is already committed to debt payments, including things like car loans and credit cards, to determine how much new mortgage debt you can reasonably take on.
- Existing loan and credit card payments
- Property tax and heating cost estimates
- Any condo fees if applicable
Down Payment Source and Size
Beyond just the amount, lenders want to confirm where your down payment is coming from and that it has been properly documented, whether it is savings, a gift, or a program like the Home Buyers Plan.
The Property Itself
Lenders also evaluate the property you are buying, including its appraised value and condition, since the home serves as collateral for the loan.
Frequently asked questions
- Is my credit score the most important factor?
- It is important but not the only factor, income stability and debt levels matter just as much.
- Can a stable job offset a lower credit score?
- Sometimes, lenders look at your whole file together rather than any single factor in isolation.
- Does the type of property I am buying affect approval?
- Yes, the property's appraised value and condition are part of the lender's overall assessment.