How to Not Qualify for a Mortgage
Sukh Sohal • February 2, 2021
If you have no desire at all to qualify for a mortgage, here are some great ways to make sure you don't accidentally end up buying a house and taking out a mortgage to do so.
One of the best ways to ensure you won't qualify for a mortgage is to be unemployed.
Yep, banks hate lending money to unemployed people! Okay, so you have a job. Well, that's okay, you can always unexpectedly quit your job just as you are trying to arrange financing! Even if you are making a lateral move, or taking a better job than the one you have now, that's cool... any change in employment status while you are looking to get a mortgage will most likely wreck your chances of getting a mortgage for a while. This is because lenders want to see stability; they want to know that you have been in your current position for some time, that you are past probation, and that everything is working out well. By changing jobs right when you are looking to buy a property, you won't instill the lender with confidence, and they probably won't give you a mortgage. Mission accomplished.
Don't wanna buy a house? Well, then it's best you don't save any money. Better yet, you should probably borrow as much money on credit as you can.
One of the main qualification points on a mortgage is called your debt-service ratio. Simply put, the more money you owe in consumer debt, the less money you will qualify to borrow on a mortgage, because your ratio of income compared to your debt is higher when you owe more money. Consider this permission to go and finance a Harley-Davidson. Do it, right now. Not a big fan of motorcycles? That's cool; a Ford 150 should do the trick nicely. The key here is to make sure you add as much monthly payment as you can. The bigger the payment, the better.
But let's say that unfortunately your debt-service ratios are in line, you have been able to save up the necessary 5% down payment, and you are on your way to buying a house. What do you do? Ugly documentation! A great way to make sure your lender feels uncomfortable is to have really terrible bank statements.
Typically when proving your down payment, the lender will require 90 days’ history of your account(s), with your name on the statement, showing that you have accumulated the down payment over time. Want to really mess things up? Make sure there are lots of deposits over $1000 that can't be substantiated. This will look like money laundering. If that doesn't work, you can always black out your "personal information." Just use a black Sharpie and make your bank statements look like a classified FBI document. Lenders hate that!
So you've got a great job and lots of money… don't panic, you can still absolutely wreck your chances of qualifying for a mortgage. Just don't pay any of your bills on time.
Seriously, borrow lots of money, and then stop paying! Boom. Why would any lender want to lend you money when you have a great track record of not paying back any of the money you borrow? Now, if this feels morally wrong, okay, here is an ethical way to wreck your credit. Don't pay that cell phone bill out of principle. We've all been there — roaming charges, extra data charges that the cell company added on your bill… choose not to pay this on principle. This is a great way to sink your chances of getting a mortgage, I mean, how are you supposed to know that some collections (like cell phones) will show up on your credit report?
Last, if you want to make sure you never get financing, insist on buying the worst house in a bad neighbourhood.
You see, the property you are looking to buy is very important to the lender. If they lend you the money to buy it and you stop making the payments, they will be forced to repossess and sell it. They are going to make sure they can recoup their initial investment. So, a "handyman special, fixer upper, with lots of potential" is a great option. As everyone knows, those words are code for "a giant dump." Bonus points if you get those terms written in the MLS listing. Yep, insist on buying something that is falling apart and stick to it; don't ever consider buying a solid home in a good neighbourhood.
a shot of a run-down house on a hill
So there you have it, if you don't want a mortgage, no problem. Quit your job, borrow lots of money, wreck your credit, and insist on buying a dump.
However, on the off chance you feel homeownership is right for you, contact us anytime, we can help you put a plan in place to avoid these (and many more) mortgage qualification pitfalls.
604-862-8080
info@oakandprime.ca
RECENT POSTS
Going Through a Separation? Here’s What You Need to Know About Your Mortgage Separation or divorce can be one of life’s most stressful transitions—and when real estate is involved, the financial side of things can get complicated fast. If you and your partner own a home together, figuring out what happens next with your mortgage is a critical step in moving forward. Here’s what you need to know: You’re Still Responsible for Mortgage Payments Even if your relationship changes, your obligation to your mortgage lender doesn’t. If your name is on the mortgage, you’re fully responsible for making sure payments continue. Missed payments can lead to penalties, damage your credit, or even put your home at risk of foreclosure. If you relied on your partner to handle payments during the relationship, now is the time to take a proactive role. Contact your lender directly to confirm everything is on track. Breaking or Changing Your Mortgage Comes With Costs Dividing your finances might mean refinancing, removing someone from the title, or selling the home. All of these options come with potential legal fees, appraisal costs, and mortgage penalties—especially if you’re mid-term with a fixed-rate mortgage. Before making any decisions, speak with your lender to get a clear picture of the potential costs. This info can be helpful when finalizing your separation agreement. Legal Status Affects Financing If you're applying for a new mortgage after a separation, lenders will want to see official documentation—like a signed separation agreement or divorce decree. These documents help the lender assess any ongoing financial obligations like child or spousal support, which may impact your ability to qualify. No paperwork yet? Expect delays and added scrutiny in the mortgage process until everything is finalized. Qualifying on One Income Can Be Tougher Many couples qualify for mortgages based on combined income. After a separation, your borrowing power may decrease if you're now applying solo. This can affect your ability to buy a new home or stay in the one you currently own. A mortgage professional can help you reassess your financial picture and identify options that make sense for your situation—whether that means buying on your own, co-signing with a family member, or exploring government programs. Buying Out Your Partner? You May Have Extra Flexibility In cases where one person wants to stay in the home, lenders may offer special flexibility. Unlike traditional refinancing, which typically caps borrowing at 80% of the home’s value, a “spousal buyout” may allow you to access up to 95%—making it easier to compensate your former partner and retain the home. This option is especially useful for families looking to minimize disruption for children or maintain community ties. You Don’t Have to Figure It Out Alone Separation is never simple—but with the right support, you can move forward with clarity and confidence. Whether you’re keeping the home, selling, or starting fresh, working with a mortgage professional can help you understand your options and create a strategy that aligns with your new goals. Let’s talk through your situation and explore the best path forward. I’m here to help.
What Is a Second Mortgage, Really? (It’s Not What Most People Think) If you’ve heard the term “second mortgage” and assumed it refers to the next mortgage you take out after your first one ends, you’re not alone. It’s a common misconception—but the reality is a bit different. A second mortgage isn’t about the order of mortgages over time. It’s actually about the number of loans secured against a single property —at the same time. So, What Exactly Is a Second Mortgage? When you first buy a home, your mortgage is registered on the property in first position . This simply means your lender has the primary legal claim to your property if you ever sell it or default. A second mortgage is another loan that’s added on top of your existing mortgage. It’s registered in second position , meaning the lender only gets paid out after the first mortgage is settled. If you sell your home, any proceeds go toward paying off the first mortgage first, then the second one, and any remaining equity is yours. It’s important to note: You still keep your original mortgage and keep making payments on it —the second mortgage is an entirely separate agreement layered on top. Why Would Anyone Take Out a Second Mortgage? There are a few good reasons homeowners choose this route: You want to tap into your home equity without refinancing your existing mortgage. Your current mortgage has great terms (like a low interest rate), and breaking it would trigger hefty penalties. You need access to funds quickly , and a second mortgage is faster and more flexible than refinancing. One common use? Debt consolidation . If you’re juggling high-interest credit card or personal loan debt, a second mortgage can help reduce your overall interest costs and improve monthly cash flow. Is a Second Mortgage Right for You? A second mortgage can be a smart solution in the right situation—but it’s not always the best move. It depends on your current mortgage terms, your equity, and your financial goals. If you’re curious about how a second mortgage could work for your situation—or if you’re considering your options to improve cash flow or access equity—let’s talk. I’d be happy to walk you through it and help you explore the right path forward. Reach out anytime—we’ll figure it out together.
