5 Things You Can Do To Qualify For a Bigger Mortgage

Say you started the home buying process backwards and started LOOKING at homes before you pre-qualified yourself for a loan.  Now you've found that none of the homes in your price range will measure up.  What do you do?  Short of robbing a bank, there are 5 things that you can do to qualify for a bigger mortgage.
1.  Reduce long-term debt
The first thing that lenders look at is your income to expense ratio.  They compare how much money you have coming in against how much you have going out every month.
We all know that a dollar will only go so far - and lenders know this particularly well.  So, if you can pay off car loans, credit cards, or any other obligations against your income, you'll have more money to spend on a loan - and a lender will let you borrow more money.
2.  Wait until you get more income
Another way to look at the income-expense ratio is from the income side.  If you have more money coming in, you can borrow more money.  If you're expecting a raise within the next year, maybe you should wait until that comes through, before asking to borrow money for a new home.
3.  Add someone else to the loan
Another way to demonstrate to a lender that he will be repaid is by having someone (with a good incomes and stable job) co-sign on the loan.  This way, the lender is looking at MORE income available to repay the loan.  Family members Bank of Dad are the typical source of someone willing to co-sign.
4.  Use financing that requires lower down payments
The basic idea is this...the more money that you have available to spend, the more money that a lender will let you borrow.  You're trading off having the money available NOW or later.  If you put a large down payment on a home now, that means you may have less income available to repay a loan later.
By the same token, if you make a smaller down payment, then you'll have more money available to repay a loan - and the lender is likely to let you borrow more.
5.  Wait for interest rates to drop
Interest rates are the price that lenders charge for the use of their money.  SO, when interest rates are high, it's because lenders are charging you more to use their money right now.
Again, it's a trade-off between now and later.  Lenders are only going to give you so much money to use over the next 15-30 years (the life of your mortgage).  They work backwards from that figure using interest rates.  If you have a higher interest rate, you have less money to spend now.
So, if you can wait for a lower interest rate, you'll be able to get more money to spend on the home you want.