Step 1 – Your Credit Score
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 may not be required.
Here are some tips to help you improve your credit:
- Paying your bills in full and on time. If you cannot afford the full amount, try paying at least the minimum required.
- Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible.
- Stay within your credit card limit and try to keep your balances as low as possible.
- Reduce the number of credit card or loan applications you submit.
- Consider an Alternative Lender (or B Lender) if you are struggling with credit issues.
We can help review your credit score and provide you with options for your mortgage needs.
Step 2 – Your Budget
When considering your budget, it is important to look at the purchase price budget, as well as your cash flow budget. Being house rich and cash poor makes for a no-fun home! The home price based on your cash flow budget may be dramatically different from the budget home price you qualify for. Not only does having a budget help you to understand your purchase price range and help you to find an affordable home, but it can also help you to see any gaps or opportunities for future savings. This will be instrumental when you become responsible for mortgage payments.
Step 3 – Your Down Payment
The ideal down payment for purchasing a home is 20%. However, we understand in today’s market that is not always possible. Therefore, it is important to note that any potential home buyer with less than a 20% down payment must purchase default insurance on the mortgage, and they must have a minimum down payment of 5%.
Step 4 – Your Mortgage Options
Rate is only one of the many features in selecting the best mortgage product that meets your financial goals. With access to hundreds of lending institutions, we are familiar with a variety of mortgage products allowing us to help find the best mortgage for you.
Step 5 – Your Paperwork
When you apply for a mortgage, you will typically need to provide a standard package of documents, which almost always includes:
- Your government-issued personal identification
- Most recent pay stub (Employee)
- Letter of employment (Employee)
- Last 2 Years of T4’s (Employed)
- Most recent T1 generals and NOA’s (Self-Employed)
- Confirmation of business ownership (Self-Employed)
- 3 months of bank account statements (Self-Employed)
- Two years’ worth of personal CRA tax filings and financials (If Incorporated)
- Your down payment (minimum 5%)
Step 6 – Your Pre-Approval
To have the best success with your mortgage, it is recommended that you get pre-approved. Pre-approval helps verify your budget and locks in a rate for up to 120 days, protecting you from interest rate increases.
Step 7 – You’re Ready to Shop
Once you have your down payment and have qualified for a pre-approved mortgage, you are ready to start searching for your perfect home.
