Mortgage for First Home Buyers
Congratulations on buying your first home!
The process of purchasing a home, especially for the first time, can be a bit overwhelming. That is why you need to work with a good team of professionals, who are knowledgeable and experienced with First Time Home Buyers in Canada.
Banks will look at three primary factors when deciding on the maximum mortgage amount you can afford:
- Down payment
- Credit history
1. The minimum down payment in Canada is 5% of the first 500K, then 10% between 500k and 1 million and 20% on anything above 1 million.
It is good to keep in mind that banks will ask for a 90-day history for all your savings, RRSP and investment accounts, therefore, try not to move money between your accounts too often when planning to buy soon.
2. Credit history is very important in Canada. It is recommended to have a score over 680 to qualify for purchasing a home, especially, if you only have a minimum down payment available.
Always do your best to pay for your debts on time and keep new balances low, and do not go over the limit on your credit cards or credit lines. Try to reduce the biggest debts to a minimum or completely, especially car finance or leases, as they have a large impact on your debt service ratio.
3. Ideally, for your income, you need to work full-time for at least 3 months before applying for a mortgage, to make sure your probation period is over.
If you work on a part-time basis, guaranteed hours are required, or a bank will need to look at your income statements for the past 2 years. In the case of self-employed individuals, there are many programs available for you as well, but it may be a bit harder to get you the approval you want, especially with only the minimum down payment available.
So, if you decide to look into purchasing your first home, make sure to talk to me first, and after carefully analyzing your particular situation, I can give you the best advice and help you move through the process quicker and easier.