Home Buyer's Guide - All About Mortgages

A Step-by-Step Guide on the Home Purchase Process

What effects your credit and how to improve your credit

Understanding what you can afford and what is looked at when getting a mortgage

What is required for a down payment on a home and other solutions to obtaining the required funds

Understanding the basic Mortgage Options

A list of the costs you should be prepared for

Income

How much do I qualify for?

 

There are two main factors lenders look at in regards to income.

Source of Income

Not every source of income can be used when qualifying for a mortgage. There are also specific guidelines of how much of the income can be used and what type of verification is needed to prove that income. 

 

For example, someone who is self employed will usually be required to prove two years of income history, whereas someone who is a regular employee with guaranteed hours may not even have to be off probation. This will also differ from Lender to Lender and is one big benefit to using a mortgage broker.

 

You may have more than one source of income such as:

 

  • Rental Income 

  • Child Tax Benefit 

  • Child Support 

  • Alimony 

 

 

  • Maternity Leave

  • Disability

  • Pension 

 

Tips 

 

Be careful about changing jobs too often. Being at your job for at least two years will increase not only your chances of being approved but increase the amount of income that can be used to qualify you.  

 

Make sure to disclose all types of income. This may allow you to qualify for more.

Debt Servicing

This term refers to the percentage of your income required to make payments on your debt such as loans, credit cards, and lines of credit.

Only so much of your income can be used towards debt so that you still have money left over for living expenses. 

 

For Example: 40% debt servicing means 40% of your income is being used to make payments on your debt. 

 

Just because you make $2000 a month does not mean that you can use all of that to go towards payments on debt such as a mortgage payment. Your mortgage broker will determine how much you can afford by using specific debt calculations.

 

*Having too much debt may decrease how much you qualify for dramatically. See examples below:

Tips 

 

If you are planning to buy a home in the near future put off some of those other purchases until after your mortgage has closed.

 

For example, things such as:

  • new vehicle

  • holiday trailer

  • boat

  • quad

  • snowmobile

  • motorbike 

Example # 1

 

Job: $24/hr for 40 hrs/week =

$49,920 Gross Annual Income

 

Debt:

  • $300 Owing on Credit Card

  • $1000 Line of Credit

  • $5,000 Car Loan = $100 monthly payments

 

 

Based on a 5% down payment this customer will 

Qualify for a Purchase Price of: $250,000

Example # 2

 

Job: $24/hr for 40 hrs/week =

$49,920 Gross Annual Income

 

Debt:

  • $1200 Owing on Credit Card

  • $4000 Owing on Credit Card

  • $6,000 Line of Credit

  • $25,000 Car Loan = $450 monthly payments

 

Based on a 5% down payment this customer will 

Qualify for a Purchase Price of: $150,000

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Krystal  250.219.3861
Kaela  250.219.3862
Email  info@themortgageduo.ca
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