How to Calculate Mortgage Qualification

At its core qualifying for a mortgage is a mathematical calculation. Plug some numbers into a formula and out pops the mortgage amount that you qualify for. It sounds simple.

The concept of the formula is: the cost of the mortgage plus your other debt obligations dividend by your gross income. This is called your total debt servicing ratio. All mortgage professionals are doing this calculation to qualify you for your mortgage. There is a lot of detail that can go into qualifying you for the mortgage but this is the basic concept.

This total debt servicing ratio cannot be higher than the lender's maximum threshold. Each lender will set their maximum total debt servicing ratio percentage for each of their products. Lenders can have different ratio maximums for each of their mortgage products or programs.

If you do not qualify for the mortgage that you want then you have two options: (1) Increase your income or (2) lower your debt payment amounts. Not all lenders accept all types of income, find a lender that will use all sources of your income.  You can pay out some of your debts to help qualify. There are many strategies to help you qualify, talk to a mortgage professional who can help you find the best lender for you.

This is just a basic description of mortgage qualification. There are many other aspects that a lender looks at to determine qualification.

Contact Us
For more information on mortgage qualification calculation, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com