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.

For tips on increasing your credit score, please contact our Equifax Certified Credit Professional, Carolyn Perry.

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.

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%. The down payment on your home could come from your own savings such as a savings account or RRSPs or as a gift from an immediate family member.

Thanks to the federal government’s Home Buyers’ Plan, potential first-time home owners are able to leverage up to $35,000 of your RRSP savings ($70,000 for a couple) to help finance the down payment. A gift of a down payment from an immediate relative is also acceptable. If your down payment comes from TFSA or RRSP, the bank will want 90 days of statements to ensure the funds are accounted for.

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. Plus, unlike banks, mortgage agents are a third-party service focused on your needs.

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 (2 pieces)
- 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 month’s of bank account statements (Self Employed)
- Two years’ worth of personal CRA tax filings and financials (If Incorporated)
- Your down payment (minimum 5%)
- Documentation to explain any unusual (generally non-payroll) large deposits or withdrawals

To have the best success with your mortgage, it is recommended that you get pre-approved. This can be done through your Mortgage Professional to ensure that you get the best mortgage product for you, from the best rate to the best term agreement.

Pre-approval helps verify your budget and allows your real estate agent to find the best home in your price range. Pre-approval guarantees the rate offered and locks it in for up to 120 days. This protects you from any increases in interest rates while you are shopping. Pre-approval lets the seller know that securing financing should not be an issue, which is beneficial in competitive markets.

Quick Tip: Don’t forget about the closing costs! These range from 1 to 4% of the purchase price and should be factored into your budget.