Probably the largest decision you will make in your lifetime is purchasing a home.
To help in this process, I can recommend bankers or mortgage brokers that can provide you with financial advice and answer any questions you may have in reference to mortgages, pre-approvals and down payments.
This is the most import first step before you begin to search for a property for 2 main reasons:
- A pre-approval helps determine how much of a mortgage you can afford.
- A pre-approval also protects the possibility of any rate increases by locking in your rate for up to 120 days.
The main factors lenders consider when qualifying you for a mortgage are:
- Employment History
- Credit History
- Value of property
Documentation Tips for Pre-Approval
- Details of employment and proof of income
- Provide other sources of income such as pension or rental income
- Current banking information
- Verification of your down payment (bank statements for last 3 months and investment statements
- Provide consent for a credit check
- Provide a list of assets including property and vehicles
- Provide a list of liability balances such as credit cards, loans
In this day and age, there are many options for a down payment. Some include:
- Your own savings
- Sale of a property
- A gift from a family member
The minimum down payment required for a first time home buyer is 5% of the purchase price. A mortgage with a down payment less than 20% of the purchase price is considered a high ratio mortgage and is required to be insured either by CMHC or Genworth Financial. The larger the down payment the less insurance fees you will be required to pay.