Compensating Aspects That Can Help Borrowers with Bad Credit Afford Houses for Sale in Markham

When you are planning to get a mortgage to buy your dream home, one of the main things people will advise you to do is improve your credit score. The process of buying one of the houses for sale in Markham is often overwhelming, so improving a credit score might be challenging for most people. Thankfully, some compensating factors can help home buyers with bad credit. Here are a few of these factors.

 

High down payment

 

When you can afford to pay a high down payment for the purchase of a home, mortgage lenders will consider your application favorably. Consider taking advantage of the many down payment assistance programs available for homebuyers. Alternatively, you can borrow from friends or start saving for your substantial down payment.

 

Low DTI ratio

 

Your debt-to-income ratio denotes your debt amount vis-à-vis your income. When your debt is too high in relation to your income, mortgage lenders consider you a risky borrower and have stringent rules for their loans. If you want to use a low DTI ratio as your compensating factor when buying houses for sale in Markham, aim for a maximum ratio of 5% to get favorable mortgage terms.

 

Accumulated savings

 

Even those with poor credit scores can save money. Open a savings account and start accumulating savings. If you have a good balance when applying for a mortgage, the lender will see you as a responsible borrower who can make sound financial choices. Investment and certificate of deposit accounts are the best choices for making a good impression on mortgage lenders.

 

Financial mistakes that caused a poor credit score should not keep you from owning one of the houses for sale in Markham. With the above compensating factors, you can still get good mortgage terms to finance your purchase. Work on these factors to become creditworthy rather than write yourself off because of a poor credit score.