3 Seemingly Harmless Moves That Could Prevent You From Getting a Mortgage

You could accidentally hurt your chances of getting a mortgage if you're not careful.

Most people can't afford to purchase a home outright. That's what mortgages are for.

To get a mortgage, you'll need to have a good credit score and some money available to put down on a home. You're also going to want to avoid doing anything that could hurt your chances of getting approved for a home loan. Here are three moves it pays to avoid.

1. Financing another purchase

Whether it's a car, a piece of furniture, or a new TV, taking on more debt right before you apply for a mortgage could make it harder to get approved. One major factor that lenders look at when evaluating mortgage applicants is their debt-to-income ratio. That ratio measures the amount of debt you have relative to your income. And as you might imagine, the higher it is, the less appealing a mortgage candidate you'll be.

That's why it's a good idea to avoid taking on new debt when you're in the process of searching for a home. Now, if your car stops working and you need a new one, an auto loan may be unavoidable. After all, you need a vehicle to function. But if you're thinking of financing purchases that can be put off, you're better off waiting.

2. Applying for a new credit card

Normally, applying for a new credit card won't hurt your credit score too much. A single credit card application will usually result in a hard inquiry on your credit report that drops your score down by less than 10 points. But if you're right on the cusp of having good enough credit for a given lender, a single application could put you below the threshold needed to qualify for a home loan.

The minimum credit score for a conventional mortgage is 620, but some lenders have higher standards. Let's say a given lender wants applicants to have a 640 or higher, and you start out with a 640 but then apply for a credit card. You might only come in with a 634, thereby hurting your chances.

3. Switching jobs

Mortgage lenders generally like to see consistency on the employment front. After all, they want reassurance that you'll be able to keep up with your monthly payments. So if you change jobs shortly before applying for a home loan, that could make a mortgage lender too nervous to loan you money.

Now, there tends to be an exception to that rule if you get a new job within the same industry. If you're an accountant who switches firms, that may not be held against you. Furthermore, if your new job pays a lot more money than your old one did, then that could actually help you get a mortgage.

Just be careful if you're making a career switch, especially if it might negatively affect your income. Going from a full-time accountant to a freelance graphic designer might cause a lender to deny you a mortgage loan.

Getting a mortgage can be more complicated than you expect. If you'll be applying for a home loan in the near future, do your best to avoid these moves that could make it more difficult to get a lender to say yes.