12/18/2021
The 3 most important factors to consider when preparing for a mortgage approval:
- Down payment
The min down payment in Canada depends on the purchase price of the home. The min down payment for a $500,000 or less home is 5% down payment. The min down payment for a home between $500,000 to $999,999 is 5% of the first $500,000 and 10% for the portion of the purchase price above $500,000
- Credit score
The minimum credit score (Equifax) required for a mortgage is 600 for banks, 550 for B lenders, no minimum for private lenders, and 600 for CMHC insured mortgages (less than 20% down payment)
- Income
Lenders consider two ratios to determine the mortgage amount you qualify for, which generally indicate how much you can afford. The two ratios are called the Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio. They consider your income, monthly housing costs, and overall debt load.
One can afford a mortgage when the monthly housing costs are no more than 32% of the gross household income, and where the total debt (including housing costs) is no more than 40% of the gross household income
