Are You a First-Time Homebuyer Looking to Get Approved for a Higher Loan Amount You Can Actually Afford?

If you’re a first-time homebuyer, getting approved for a mortgage that fits your budget and meets your needs can feel like a daunting task. But there’s good news: there’s a simple strategy that can help you secure a higher loan amount—one that you can actually afford.

Here’s the tip: It’s all about reducing your debt and/or boosting your income, along with maintaining a good credit score.

1. Reduce Your Monthly Debt

One of the most effective ways to increase your loan approval amount is by cutting down your monthly debt. Lenders use your debt-to-income (DTI) ratio to determine how much you can borrow. The lower your DTI, the more you can qualify for.

For example, let’s say you manage to reduce your monthly debt payments by $350. That might not seem like a huge amount, but it could actually boost your buying power by as much as $50,000! That’s right—by lowering your monthly obligations, you free up more of your income to go towards your mortgage, making lenders more likely to approve a higher loan amount.

2. Boost Your Income

Another approach is to increase your income, either by asking for a raise at work, taking on a second job, or finding additional sources of income. Even a modest increase in income can have a significant impact on your loan approval.

When your income goes up, your DTI ratio improves, which makes you a more attractive borrower in the eyes of lenders. Plus, the extra income can help you build up your savings, which you can use for a larger down payment—another factor that can increase your loan approval.

3. Maintain a Good Credit Score

Of course, none of these strategies will work unless you have a solid credit score. Your credit score is one of the first things lenders look at when evaluating your loan application. Make sure your score is as high as possible by paying your bills on time, keeping your credit card balances low, and avoiding any major financial changes before applying for your mortgage.

By reducing your debt and boosting your income, you can make a big difference in the loan amount you’re approved for—without stretching yourself too thin. With a little bit of planning and discipline, you can turn your dream of homeownership into a reality, with a mortgage that you can comfortably afford.