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  • Writer's pictureJosh Reyes

4 factors mortgage lenders consider

You’re curious about buying but not really sure where you stand. You have some savings, an income plan, and a general strategy but you want to make sure you’re in the best position possible when you apply for your mortgage.

Photo by Michelle Spollen

When applying for a mortgage or pre-approval, there are four main factors your bank or mortgage broker will consider.


Lenders will look at your gross annual income and your partner’s (if you’re buying together). The higher the income, the higher the amount they will typically lend.

Your income carries the most weight out of the four core categories. The best way to improve your chance of your ideal mortgage approval is by ensuring you are bringing in a solid income.

Self-employed? Lenders will typically look at the average of your last two years of income.

Credit score

In Canada, credit scores can range anywhere from 300 to 900, with 800 to 900 considered an ideal score.

This number is calculated based off a variety of factors including payment history, how much debt you have, and how long you’ve been using credit for your debts.

Make sure you pay your bills on time, and pay off any debts like credit cards or loans to help increase your credit score.


The debts a lender consider are essentially anything you currently owe money on including student debts, car loans, major purchases on a line of credit and the list goes on.

Thinking about buying in the upcoming year? Try to avoid making a major purchase like a new car right before you buy a home or consider doubling down on paying your student loans back faster.

Down payment

The last and final aspect lenders consider when setting your mortgage approval is the down payment. Putting down more money is a sign of reliability and scores you major points in a lender’s risk assessment.

Because of this, a higher down payment can mean a lower interest rate for your mortgage rate. It also automatically means you already have equity in the home which can fast track you for your finances going forward.

Want to know where you sit right now?

For starters, you can use a pre-qualification which acts as an informal assessment. You can use an online calculator provided by most banks or brokers or give them a quick call.

A pre-qualification doesn’t cost you anything, but it also isn’t a formal recognition of your status. These can primarily be used to get a ballpark perspective.

Disclaimer: I am not a mortgage specialist and the above should only be taken as loose advice. Please contact a mortgage specialist or bank for formal advice.

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