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How does a bank decide whether or not to lend to me?

There are many factors that go into the approval of a mortgage. The most important thing a lender is looking for is your ability to pay your mortgage on time and in full.

Some factors that lenders consider:

How long you've been at your job
How many credit cards you have, the balances on them and the available credit
Income and debt levels
Housing ratio - percentage of your gross monthly income that will be spent on housing expenses in your new home. This includes mortgage payments, taxes, insurance and maintenance. The lender is looking for a ratio of 28% or lower.
Total obligation ratio - percentage of your income that goes to both your housing expenses and any other debts, including credit cards, car loans and child support. The lender wants to see a ratio of 36% or lower. You can sometimes negotiate for higher ratios based on your individual circumstances.

Sometimes you can negotiate with the lender for higher ratios based on your individual circumstances.

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