The time has come and you’re ready to purchase your first home. It’s an exciting time but the
venture can sometimes seem daunting. Here are some of the rules and suggestions that can
make the experience much easier.*
- When your down payment is between 5% and 20% of the purchase price the bank will
be required to insure the mortgage by a default insurer (CMHC, Genworth or Canada
- Your lender will require evidence that your down payment is coming from your personal
savings, RRSP, GIC, TFSA etc...and they will require evidence that the down payment has
been in your account(s) for at minimum of 90 days prior to the funding date. There are
exception and include: down payments coming from gifts received from immediate
family members, inheritances, loans from government sponsored homeownership
programs, personal loans, sale of chattels, or other real estate, lotteries and other
winnings are all considered.
- Your employment history must be at least past your probationary period and preferably
longer. In addition your employment should be full time with guaranteed hours as
evidenced by a recent paystub. Additionally, lenders will require that you provide them
with your two most recent years "Notices of Assessments" and a letter of employment
from your employer no older than 30 days and written on company letterhead showing
your start date, position, rate of pay and whether your employment is full or part time
and signed by the writer. Part time applicants are also eligible for mortgage financing but will be required to prove that they have worked for the same employer/industry for at least 2 years.
- All lenders require a credit bureau no older than 30 days old. Lender will look for your
score, credit history, and repayment history on trades (includes: credit cards, lines of
credit, car loans, student loans, mobility plans etc...). Most lenders require that you have at least 2 trades with maturity meaning at least 2 years of history. Your credit limits in addition to being mature should have a total combined credit limit of at least $3,500. to $5,000.
- It is strongly advised to secure a pre-approval before securing the services of a realtor.
Additionally be sure to have your broker or bank provide you with a fully underwritten
pre-approval. Most brokers and banks will only give a verbal pre-approval. Be cautious many verbal pre-approvals have little value as many applicants have regrettably learned. A fully underwritten pre-approval occurs when a lender reviews you current credit bureau along with the information included in the pre approval mortgage application to determine if based on the information contained that the lender would provide a mortgage commitment when the applicant is ready to move forward with a purchase or refinance.
- After you find a home make an offer. It is advisable to make all offers conditional on
financing for at least 10 banking days. The mortgage application process has become
longer especially when the mortgage must be insured. So to avoid disappointment
make sure you give yourself, underwriters and appraiser(s) all enough time to get their
- For the self-employed, disabled, pensioners etc.... please contact me for further
information on rules and regulations regarding your application(s) for financing.
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*The above is general information applicable to most banks and can change at any time. The reader should not assume all information contained is completely accurate. It is strongly advised that before applying for a mortgage that the reader should speak to their Mortgage Broker.