The 2nd MOST common question I get asked

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CMHC will allow a maximum of 35% of your gross monthly income to be allocated towards your housing cost, and up to a maximum of 44% of your gross monthly income towards all your credit obligations. )

Before you start your home search, you need to know how much you are qualified to purchase.  The amount you qualify for depends on a variety of factors such as your credit, down payment, your income. the interest rate plan and the lender you choose.  While you may be able to get pre-approved at your bank, they will not be able to provide the same range of products and mortgage limits that a mortgage broker can.  Before you make that important decision to purchase, you owe it to your self to meet us.

Qualifying for a mortgage in Canada is about four main factors, stable income, a good credit history, making a sound choice on the property you are purchasing, and how much (if any) of a down payment you have.   All four of these factors work together to determine which mortgage options will suit your situation best, and the rate you will receive by the mortgage lender.

Stable Income, whether employed or self-employed, is something mortgage lenders will want to confirm.  Most mortgage lenders will required a letter of employment confirmation as well as recent pay stubs and the last two years Notice of Assessment forms from CRA (these are the notices you receive after you file your taxes each year that show your income and show whether any taxes are owing).  The lender, at their discretion, may also call your employer to confirm the details in your employment confirmation.

Credit History is a piece of information always reviewed by mortgage lenders.  If your credit isn’t perfect, there are programs available to you while you rebuild your credit.  A credit score of 680+ is most desirable by lenders.  Please see Your Credit Score for information on how your score is calculated.  A credit history is always pulled by your mortgage broker when you apply for credit or seek pre-approval so that we can determine which programs will suit your situation.

Property choices also impact the mortgage qualifying process, as the real estate is the lender’s security – if for some reason – you are unable to repay the mortgage.  The mortgage ender will want to be sure that the property is in good condition and that if they needed to market the property it would sell quickly.  For example, condos that have previously been “leaky” are often rejected by lenders for this reason.  A property appraisal is almost always ordered and involves a physical inspection of the property for the lender by a certified appraiser who assesses the condition and market value of the property to be mortgaged.

Down payments are not always required as there are mortgage programs that provide 100% financing for qualified purchasers.  If you have a down payment of 20% or more of the purchase price, this is known as a “conventional” mortgage, and the mortgage lender will not require default insurance (and related premiums).  If you have less than 20% down, the mortgage lender will insure your mortgage against default.  If you have no down payment, you generally will still need to have some cash to put down for your real estate purchase deposit and for Closing Costs (estimated at 1.5% of purchase price).

You may want to call me to discuss 604-273-2002

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

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An independent Mortgage Specialist associated with the Verico Mortgage Network.