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Becoming a homeowner can be very exciting, but it’s not always the best decision for everyone. Before buying a home such as a house or a condo, make sure you consider all costs. According to Canada Mortgage and Housing Corporation (CMHC), your monthly housing costs should not be more than about 39% of your gross (before deductions) monthly income. These costs include your mortgage payments, property taxes and heat costs. Your entire monthly debt load should not be more than 44% of your gross monthly income. This includes your mortgage payments and all your other debts, such as loan or credit card payments.
This calculator helps you determine whether or not you can qualify for a home mortgage based on income and expenses.
https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MortgageQualifier.aspx?lang=eng&lang=eng
Mortgage stress test:
To qualify for a mortgage loan at a bank, you will need to pass a “stress test”. You will need to prove you can afford payments at a qualifying interest rate which is typically higher than the actual rate in your mortgage contract. You need to pass this stress test even if you don’t need mortgage loan insurance.
Credit unions and other lenders that are not federally regulated do not need to use this mortgage stress test.
Banks must use the higher interest rate of either:
- 5.25%
the interest rate you negotiate with your lender plus 2%
Enter the highest of the two rates above in the field Annual interest rate to determine if you can pass the stress test.
If you already have a mortgage, you’ll need to pass this stress test if you:
- refinance your home
- switch to a new lender, or
- take out a home equity line of credit
Saving for your home
To buy your home, you’ll need a down payment. To accumulate the amount you need, make saving part of your budget. Most employers deposit your pay directly into your bank account. Set up automatic transfers to a savings account for each pay period. Getting preapproved for your home Before you start looking for the home you’d like to purchase, get preapproved for a mortgage. Once you know what amount you qualify for, you can start looking for the home that is right for you and your budget.
Finding your home
As your realtor, I will search for homes, negotiate a purchase price, fill out and file all paperwork and more.
