How to Qualify for a Mortgage in BC
So, you are ready to purchase a home…and now you need to seek out a mortgage. There are four main factors involved in qualifying for a mortgage:
(1) You Need to Prove a Stable Income
Whether you are employed or self-employed, mortgage lenders need to know that you have a stable income to show that you will be able to make your mortgage payments. To prove you have a stable income, you may be required to provide a letter of employment confirmation, recent pay stubs, and Notice of Assessment forms from the Canada Revenue Agency (known as CRA).
(2) You Need a Good Credit History
Mortgage lenders ALWAYS review credit history. This shows if you have debt, how much debt you have, if you have kept up with your credit card payments, how many creditors you have etc. You are able to retrieve your credit score from the following organizations in minutes: Equifax & TransUnion Canada. It is a very good idea to do so prior to contacting a mortgage broker so that you know where you stand in terms of the likelihood of being able to qualify for a mortgage. You may need to first pay down some of your debt and/or build up your credit.
Scores typically range from 400 to 900, with good scores typically being 600 and higher. A credit score over 750 is considered excellent.
Even if you are not looking for a mortgage, you should always keep tabs on your credit history to ensure that everything is accurate and so that you are not left in the dark about your finances.
(3) You Need an Adequate Down Payment
Basically this comes down to: Do you have enough money for a down payment for the property that you want to buy? A property that is $500K for example will require a higher down payment than a property worth $250K. If you are a first time home buyer, this makes a difference as well, as you only need 5% down. Have RRSPs? Read more about withdrawing RRSPs for a down payment.
(4) Your Choice of Property
The real estate you want to buy is the lender’s security. If you not able to repay the mortgage, they may need to place the property back on the market. Therefore, they want to ensure that the property will be able to sell quickly without any major issues. In Vancouver for example, mortgage lenders often steer clear of leaky condos.
A physical inspection is required by a certified appraiser who can assess the condition and market value of the property.
All of these factors work together to determine if you will qualify for a mortgage for the property that you wish to buy, which mortgage options will be most suitable, and the rate you will receive from the mortgage lender(s).
Check out our mortgage calculator and amortization schedule. Contact Ronin Mortgage anytime to request a pre-approval or use our secure online mortgage calculator. We shop banks for the best rates in British Columbia, including Vancouver, Burnaby, Coquitlam, Port Coquitlam, Surrey, Maple Ridge, and surrounding areas.
We look forward to bringing your dreams of home ownership to reality.