Qualifying for a mortgage in Canada depends on four main factors, stable income, a good credit history, making a sound choice on the property you are purchasing, and how much 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.
Are you an employee or are you self-employed?
- If you are an employee you will need to have a letter from your employer and a recent pay stub.
- If you are self-employed I will need a copy of your last two years Notice of Assessments from CRA. A Notice of Assessment is sent to you personally after your taxes are filed.
- The lenders want to confirm that you have a stable source of income.
Do you have good credit?
- If you have good credit you will get the best rate.
- Don’t worry if your credit isn't perfect there are programs available to you while you rebuild your credit. I can still get you approved for a mortgage but remember your rate may be a little higher for the short term.
- 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.
- A score of 680+ is most desirable by lenders.
- The property choice also impacts the mortgage qualifying process as the real estate is the lender's security, if for some reason you were unable to repay the mortgage. The mortgage lender 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.
- 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.
- This depends on your assets, equity, debt and total household income.
- A minimum of 5% down payment of the purchase price is required.
- If you have less than 20% down the mortgage lender will insure your mortgage against default and the premiums will be included in your total mortgage amount.
- 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.
For specific advice on how much you will qualify for please call me anytime at 778.388.4240 or apply online for pre-approval at www.applytocleverlending.com.