As mortgage consultants, the question we are asked most frequently is "How much can I borrow?" Many residential mortgage products these days are standardized so that we can often quote the loan-to-value ratios for various types of loans. But ultimately, when we have to put pen to paper on the application, they are the applicant's INCOME and CREDIT SCORE that detemine how much the client can borrow. If the applicant has sufficient and provable income and clean credit bureau, then he/she can obtain the maximum possible (95% if insured; 80% uninsured in the case of purchases). However, everybody's situation is different and unique. For most clients, their circumstances are far from the ideal profile of the perfect client.

For example, we often service self-employed applicants whose true incomes are less than documented incomes (eg. according to tax returns). In such a case, even if the applicant's real income is sufficient to repay the mortgage loan, the lender may not recognize such income unless it can be documented. For this type of client, we can utilize "stated-income" products which allows the client's income to be grossed up closer to the client's real (and loan-serviceable) income. But also required is a certain minimum credit score acceptable to the lender.

In conclusion, if income is somewhat lacking but credit is excellent or conversely, if income is sufficient and provable but credit history isn't perfect, there is a good chance a deal can be done. If both are lacking, however, then the borrower had better be prepared to shop around for higher priced loans.