There are a few components required for you to successfully qualify for a mortgage. Here are the three crucial things you need to get yourself approved to buy that home:
There are many different ways people earn income nowadays (salary, commissions, bonus, tips, etc.). Lenders would like to see that you receive a consistent source of income. This will have a large impact on what you can qualify for, as the more income you make (and can prove), the more of a mortgage you can generally qualify for.
If you are self-employed, click here to see how your income can be assessed differently.
Your credit report informs lenders how you have managed credit in the past, and your credit report will generate a score based on that history. Lenders are looking for a score ranging between 600-900. 600 is considered low, 680 is excellent, and anything above 700 is exceptional. Your credit score is important as it will determine what interest rates you have access to. Generally speaking, if you have established credit (at least two different types for the past two years), pay your bills on time, and don’t max out your credit limits, your score should be great!
- Down Payment
Having the appropriate amount of money for a down payment shows your lender that you can afford to pay for a house and that you are financially responsible. You are required to put a minimum of 5% down of the purchase price of your home. If you have at least 20% available for a down payment, you are rewarded by not being required to purchase mortgage default insurance. Lenders will accept a down payment from the following sources: your own savings, RRSP’s, gifts from family, or from borrowed funds.
To get a better understanding on the documentation required depending on the type of down payment you plan on using, click here.
If you believe you are ready to purchase a home now, getting ready to purchase one in the near future, or just want to find out where you currently stand, click here to fill out an application. I will be happy to put together a customized plan on how you can get a mortgage that best suits your individual needs.