Getting a mortgage can feel like a maze, but it doesn’t have to be. In this guide we break down the exact things lenders look for and give you easy actions to improve your odds. By the end you’ll know which numbers matter, which documents you need, and how to present yourself as a low‑risk borrower.
First, let’s see what lenders check. The most common factors are credit score, debt‑to‑income ratio (DTI), down payment size, and employment stability. A credit score above 680 usually puts you in the “good” range, while scores below 620 can raise red flags. DTI is the percentage of your monthly income that goes toward debt; most banks want this under 36 percent.
Down payment isn’t just about saving cash—it signals to the lender that you have skin in the game. A 20 % down payment automatically removes private‑mortgage‑insurance (PMI) costs, but many programs accept as low as 3 % if you qualify for a low‑down‑payment loan.
Employment history is the last piece of the puzzle. Lenders typically want at least two years of steady work, preferably with the same employer. If you’ve switched jobs recently, be ready to explain why the move improves your income stability.
Now that you know what they’re looking for, here are concrete actions you can take:
1. Check Your Credit Report – Get a free copy from the major bureaus and correct any errors. Even a small mistake can shave points off your score.
2. Pay Down Small Balances – Reducing credit‑card balances lowers your DTI and boosts your credit utilization ratio, which can lift your score quickly.
3. Save for a Bigger Down Payment – Every extra 1 % you put down saves you money on PMI and can shave interest points off the loan.
4. Gather Documentation Early – Bank statements, pay stubs, tax returns, and proof of assets should be ready before you apply. Lenders love organized borrowers.
5. Get Pre‑Approved – A pre‑approval letter shows sellers you’re serious and locks in an interest rate for a short period. It also highlights any issues before you start house hunting.
Remember, each lender has its own scoring model, so it’s worth shopping around. Some banks are more forgiving on credit, while credit unions might offer lower rates for members.
Finally, stay honest. Misrepresenting income or assets can get you denied now and hurt future applications. Be transparent, answer questions clearly, and keep the lines of communication open with your loan officer.
By tracking your credit, managing debt, and being prepared with the right paperwork, loan approval becomes a realistic goal rather than a distant dream. Take these steps today and move one step closer to the home you’ve been eyeing.
Everything you need to know about borrowing $100k from a bank: detailed steps, smart tips, approval requirements, and pitfalls to avoid. Updated for New Zealand in 2025.