How to get a loan   

Here are some great tips of what it takes to get a loan to buy your first property.  Buying your first condo or home is a major step towards financial security, but it is important to make sure that you know how to get a loan. A mortgage is more than paying the amount that you bought the condo for, it is also necessary to pay for maintenance, taxes, and insurance for the place. In order to learn how to get a loan, however, there are several steps a responsible person should take to make sure they are ready for a mortgage.

Step 1 : Your Credit Score:

The first step of how to get a loan is to save and improve your credit score. After this, get pre-approved for a mortgage. While the exact amount that a bank will loan to you can vary, there are ways to calculate on your own how much you will qualify for. There are several different formulas that banks use to determine how much to loan to you.

Step 2: Mortgage to Income Ratio 

The first formula that anyone who is struggling to figure out how to get a loan should be familiar with is a mortgage to income ratio. In general, banks do not want to loan a person a total of more than four times their annual salary. For people with less than stellar credit, this number is dropped to three times your annual salary. In addition, a bank prefers for your total mortgage payment to be no more than one third of your monthly income. People with poor credit or a lot of other debts may be limited to one fourth of their monthly income.

Step 3: Debt to Income Ratio

Next, a bank will calculate your debt to income ratio. They will add your total amount of debt, including the amount of the proposed mortgage, and compare it to the total amount of income you have. Ideally, debt payments will not make up more than sixty percent of your net income. If you have bad credit, this amount might drop as low as thirty three percent.

Step 4: Putting it all together

Using these formulas, a bank will calculate the maximum loan they can give you. The bank will calculate both the income to mortgage ratio and the debt to income ratio, using a ratio that is based on your credit score. Because each bank uses a different score, however, it is typical to see different figures for these formulas from different banks. The lowest possible mortgage amount using these formulas will be the amount offered to you.