What to do if you don’t qualify for the loan amount you wanted?

You’ve made the big decision to buy a home and gone through the application process only to find out that you don’t qualify for the amount you wanted. Now what? You’ve got some options to consider, but you should always talk to your loan specialist to find out why you didn’t qualify for the amount you wanted. Once you know why, you can figure out the best way to approach the problem.
 
Save
If your problem is that you don’t have enough of a down payment, you may need to step back from a loan and save more. Often credit unions offer mortgages that require smaller down payments than the traditional 20% needed. United Heritage offers loan programs with 3% and 5 % downpayment options. Talk to us about the types of loans that we offer and our loan specialists will work with you to find the loan option that works best  for you.
 
Clean Up Your Credit
Make sure your credit report is accurate. If there are problems with your credit, make sure you are addressing them. Contact each of the three credit bureaus to ensure that there are no mistakes in your credit report.  If you have outstanding credit problems, work with the creditor to get those fixed. Also try not to open new lines of credit before applying for a mortgage. Boosting your credit score before applying for a mortgage is your best bet.

Reduce Your Debt to Income Ratio
Often it's your debt to income ratio that can have the biggest impact on how much you will qualify for on a loan.  There are a few ways you can reduce your DTI, including paying off some low balance credit cards. Another great option might be to refinance large installment debt like a car to a longer term to reduce the monthly payment. If you have saved money for a 20% down payment for your home, you may be able to use those savings to pay down some debt and qualify for a 5% down payment with certain loan programs. Before you begin to pay off any debt be sure to talk to your loan specialist who can advise you on the best course of action.
 
Loan Programs
You may qualify for more money under certain loan programs offered by the FHA or VA.  We have many homebuyer programs or lower down payment options. 
 
Co-signer
Adding a co-signer to the loan may maximize the amount you can get for a loan. If your income is low, adding a co-signer may be your best bet. It is a big responsibility to be added to a mortgage, so make sure that it is someone who is willing to take the financial risk should you not be able to make payments. Often lenders will want to know your relationship to the co-signer and whether the co-signer will live at the property. If they co-signer isn't going to live on the property they may be required to be a parent or child (in an elderly parent scenario). Also, remember that the co-signer will most likely have to go through the mortgage application process as well.

While it’s rough not getting the loan amount you wanted, there are options to help.  Having good communication with your lender is key to making sure you get what you need from a loan. At UHCU our loan specialists are committed to working with you throughout the home buying process. To get started you can apply online or with a call to one of our loan specialists at 512.435.4444.