Thinking about buying your first home? Exciting times ahead—but before you start house hunting, there’s one big step to tick off your list: qualifying for a mortgage.
The process can seem a little daunting at first, but with the right preparation, you can improve your chances of approval and access better rates. Here are five practical tips to help you qualify for a mortgage like a pro and take one step closer to securing your dream home.
1. Strengthen Your Credit Score
Your credit score plays a major role in whether your home loan is approved and what interest rate you’re offered. Lenders use it to assess how reliable you are with credit.
Aim for a score of 620 or higher to meet the minimum threshold for most home loans. A higher score will often mean access to lower interest rates and more flexible loan options.
Quick tips to improve your score:
- Pay your bills on time, every time.
- Keep your credit card balances low.
- Avoid applying for new credit just before or during the mortgage process.
- Regularly check your credit report for errors and dispute any inaccuracies.
2. Organise Your Finances and Lower Your Debt
Lenders want to see that you can comfortably manage your mortgage repayments alongside your other financial commitments. This is where your debt-to-income (DTI) ratio comes in—a key factor in the assessment process.
Keep your DTI below 43% to strengthen your application.
What lenders will look at:
- Income and employment history (ideally two years of stable income)
- Existing debts (credit cards, car loans, personal loans)
- Bank statements and tax returns
Pro tip: Try to pay down high-interest debts before applying and avoid taking on new debts during the application period.
3. Save for a Strong Deposit
Saving a deposit is one of the biggest hurdles for first-home buyers—but the more you can put down upfront, the better your mortgage options will be.
Most lenders require at least 5–20% of the property’s purchase price.
Why a larger deposit helps:
- You may avoid paying Lenders Mortgage Insurance (LMI)
- You’ll reduce your overall loan amount
- You’ll likely score a better interest rate
Consider this: Some lenders offer first-home buyer loan programs with low deposit requirements, but they often come with conditions. Explore all your options and weigh up the long-term costs.
4. Stay in Your Job (for Now)
Lenders love stability—especially when it comes to employment.
Most lenders prefer borrowers to have at least two years of consistent employment in the same role or industry. If you’re considering a career change or switching to freelance work, it might be best to wait until your mortgage is secured.
If you’re self-employed: You’ll need to provide extra documentation, including two years’ worth of tax returns and profit-and-loss statements.
5. Get Pre-Approved Before You Start House Hunting
Pre-approval is your green light to shop with confidence. It shows sellers you’re serious and gives you a clear idea of your borrowing capacity, so you can narrow down your property search.
Benefits of getting pre-approved:
- Know your exact budget before you commit
- Strengthen your negotiating power with sellers
- Speed up the settlement process once you make an offer
Pre-approval typically involves submitting financial documents and going through a soft credit check. It’s not a guarantee of final approval, but it’s an important step in the right direction.
Final Thoughts
Qualifying for a mortgage doesn’t have to be stressful. By taking control of your credit score, reducing your debts, saving a healthy deposit, and demonstrating income stability, you’ll be in a strong position when you apply.
And remember—getting pre-approved before you start your property search can save time and help you shop smarter.