Homebuyers must typically possess a good credit score, a down payment (ranging from 5% to 20%) and a stable income (6-12 months) in order to secure a mortgage in 2018. In addition, as of the new OSFI mortgage qualification rules, you must also pass “the stress test”. Our team of mortgage specialists can help you improve your credit and build a strong application to get you approved faster!
As of January 2018, OSFI has implemented new regulations which force homebuyers to qualify at The Bank of Canada’s benchmark rate OR the current contracted rate + 2% before being approved for a mortgage! This ensures you can keep up with your mortgage payments each month and won’t default in the long term.
Your credit score is the first thing a lender usually looks at when applying for a home loan. In addition they want to see you can pay your bills on time and have no delinquencies on file. Your available credit and outstanding debt is also taken into consideration; lenders need to see you can afford future housing costs + your current debts based on your income. If you’re not sure you’ll meet requirements, our team offers free financial advice and credit counselling!
Typically, 600+ is in the good credit range. If your credit score is lower, there are still many options available! For example, private lenders usually accept lower credit scores (since they look more at the value of your property) or our team of mortgage specialists can help you get your credit score up!
Your payment history, delinquencies, balance to limit ratio, recent inquiries as well as length, variety and history of accounts. Learn more on our blog post.
Getting a pre-approval lets you know how much you can afford before you start shopping for a home! This also locks in your rate until closing, in case rates spike. If rates drop by the time you purchase your home, you will get the lowest rate available.
Depending on the cost of the home, acceptable down payments range between 5-20%. These can be gifted, from your own resources, or borrowed; depending on what the lender approves. With a down payment lower than 20%, you have what is considered a high-ratio mortgage, therefore you will have to pay an insurance premium of up to 4% of the mortgage amount.