Home prices have been rising and will unfortunately keep rising for the foreseeable future. With this in mind it’s possible you might want – or need – a bigger mortgage. If you’re thinking about it, there are ways you can convince the bank that you deserve more borrowing power. Take a look at these strategies to get a bigger mortgage.


1. Show more income

Proof of more income can land you a bigger loan, but that doesn’t mean you need to storm into your boss’s office demanding a raise or get a higher paying job. If you can, sure it can help, but it’s not necessary if you can’t. There are other ways to show addition to your salary or wages with other sources of reliable income.

Show proof of interest or dividends from investments, income from rental properties, alimony or child support, social security income, and money earned from a part-time job or side business. The latter comes with the stipulation that you have to have earned from this job or business for over the last two years.


2. Pay off other debt

A lender will look at your debt-to-income (DTI) ratio when you apply for a mortgage. This is the percentage of your monthly income you are dedicating to your minimum monthly debt payments. A GTI ratio of less than 36 per cent is generally considered ideal but some lenders are comfortable with going higher.

Paying off credit card debt or an installment loan can make a big difference in this figure. It’s a quick and easy way to increase how much you qualify for.

You don’t have to pay it all off in one fell swoop. You can reduce it with a balance-transfer card or refinancing an auto loan to lower your payment. You can also consolidate your debt into an installment loan.


3. Raise your credit score

A lower interest rate and therefore a slightly larger loan can be obtained with a higher credit score, but only to a certain extent.

You can raise your credit score a number of ways. Check your credit reports, stay on top of payments, and avoid applying for new accounts too often, can all help you in raising your credit score. Take advantage of self-reporting apps like Experian Boost and UltraFICO and add accounts with positive payment history, boosting your score.


4. Put at least 20 per cent down

You can get a bigger loan if you don’t have to pay for private mortgage insurance (PMI). So, if you’re applying for a home loan like a Hong Leong Finance home loan and your down payment is at least 20 per cent of the house’s price, you won’t need to pay for PMI which protects the lender if you stop paying your loan.

Without the 20 per cent down payment, PMI becomes part of your monthly costs and can decrease the size of the loan you’re eligible for.

If you have the cash available after paying your 20 per cent, you can pay your lender a little more upfront to lower the rate of your interest.


5. Add a co-borrower

A co-borrower, especially one with strong credit and a steady income, can go a long way to convincing a lender that you deserve a larger loan. You and your co-borrower’s income coupled will increase the total income the lender can use to qualify you for a loan.

Co-borrowers can be spouses, domestic partners, friends, or relatives. But it isn’t just a name on a piece of paper. It’s for if people in both parties want their name on a property and agree to share the responsibilities of paying back the loan.


6. Build cash reserves

Having additional assets in the bank, or elsewhere, will help you qualify for a bigger loan, even if you don’t necessarily need cash reserves to qualify for a mortgage. If you have been putting away funds, you can prove you will be able to handle unexpected expenses and continue to make your mortgage payments. Without this, a lender would be concerned that one emergency could cause you to fall behind and will be less comfortable to offer you more.


7. Shop around

Keep an eye on comparison websites and visit various banks to get multiple rate quotes and loan offers. Comparison shopping will pay off over the course of a loan and if you get multiple preapprovals, you will get various offers and chances are they will have different amounts, allowing you to choose a lender that will offer the largest preapproved loan.

Plus, you can use your lower offers as leverage with a lender that preapproved you for a smaller amount. It’s possible they may reconsider and increase the amount they can offer you, allowing you to get the biggest mortgage at the lowest price.