When you get a mortgage pre-approval, do they look at your current salary or do they average out over the past 2 years? I've heard different things from different sources. Assuming credit score is good.
Mortgage Pre-Approval?
- Thread starter Keebler Elf
- Start date
Keebler Elf said:
Hey Keebler I JUST did this a week ago. Decided to go with a different lender this time. They look at your current salary only. Unless there is a problem with your credit rating they only need your current salary. It's all about that magical 40% number with mortgage lenders these days. You cannot be in debt more than 40% monthly salary to get a mortgage. The lower your % the better you are. we came out at 13% this time so we are golden and were pre-approved on 5 minutes. Be careful not to get too many preapprovals as each "preapproval request" goes onto you credit rating/report.
Thanks! That's good news.
I'll be nowhere near 40%. I'm debt free.
I'm only going to get the pre-approval (pre-qualified?) where they review the numbers but don't actually do a credit check. I'm not that ready yet.
I'll be nowhere near 40%. I'm debt free.
I'm only going to get the pre-approval (pre-qualified?) where they review the numbers but don't actually do a credit check. I'm not that ready yet.
They look at current salary and typically want to see you in your current job for a year. They might ask you to confirm your salary through a letter from your employer or through providing last year's CRA tax assessment notice. Remember also that people generally qualify for way more than they can realistically afford.
Keebler Elf said:
Pre-qualified and pre-approved are two different things. Pre-qualified is just a quick review that states you "probably could" afford an amount or you "probably could" get approved. There are no guarantees. It does not mean you will get approved and really offers nothing other than a range of $$ you can afford and gets you psychologically fixed with one provider. If you are half intelligent you most likely already know this range.
I would say pre-qualify when you get the itch to look.
Pre-approve when you get serious.
I work in finance. It's not just your current salary if you've only been with this employer within recent months. For a mortgage, you will be required to provide substantial proof of income. For a car loan or something to that effect, a recent paystub is usually fine, unless you've just gotten that new job, in which case, they could request a copy of your T4 from the previous year.
Another factor that is considered with your current length of employment is how long you were with your previous job. Someone who goes from job to job every few months is a higher lending risk.
I often pre-qualify doing a quick assessment of a customer's TDSR (total debt service ratio, the magic 40% mentionned above). The actual process takes more time.
Current salary is ok if you've been with your employer for a substantial amount of time. (usually 2 years) Less than that, you should expect to provide more info.
Another factor that is considered with your current length of employment is how long you were with your previous job. Someone who goes from job to job every few months is a higher lending risk.
I often pre-qualify doing a quick assessment of a customer's TDSR (total debt service ratio, the magic 40% mentionned above). The actual process takes more time.
Current salary is ok if you've been with your employer for a substantial amount of time. (usually 2 years) Less than that, you should expect to provide more info.
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