Are you or someone you know thinking about purchasing but don’t know where to start? See below. I am here if you have questions. Call me.

Qualifying today has never been more challenging. My initial questions would be, are you still working? How is the credit? Have you saved up a down payment? These are crucial components when applying for a mortgage today.

Down Payment: Saving for a down payment may be the easiest through an RSP. You could make monthly contributions. Then at tax time, the RSP contributions reduce your tax obligation, which should generate a refund. Then you take the refund and put in your RSP and continue the cycle until you have saved enough for a down payment. Savings needs to be your starting place.

What’s enough down payment? 7% of the purchase price. For example; If you would like to buy a home or $300,000.00, you will need a minimum of 5% down = $15,000.00 + 2% for closing costs $6000.00. Now a bank/broker and the guidelines all say 1.5%, but it’s not enough, 2% is a little more practical.

Once you have adequately saved or are getting close to your savings goal, we can move forward with a pre-approval.

DEBTS: Keep your debt levels low to none. Every penny you put towards interest is every dollar taken away from your down payment. Don’t rob yourself with corrosive debt.

Pay ALL your bills on time, every time! Even if it’s the minimum. 

Keep your credit card and lines of credit limits high, and your balances low. I know this is not what you are accustomed to hearing. This strategy allows for better utilization of ratios. Good credit is all about proportions. Keeping your debt ratios low will keep your credit score high and keep you from being house poor in the future.

Live below your means. I understand this is not easy in a world of wants. But, when your primary desire is homeownership, practicing restraint is worth obtaining your dream.

Income: The more revenue, the better, remember. Again, it’s all about the ratios.

Understanding GDS/ TDS Ratios

GDS is your Gross Debt Service = PITH Principe, Interest, Tax and Heat, and 1/2 the condo fee, if applicable. This number cannot exceed 39% with excellent credit. This means we can only use 35/39% of your Gross income to accommodate PITH.
If the credit score is below 680, you may be required to stay within the lower GDS score of 35% – Keep your credit score clean and healthy.

TDS is your Total Debt Service = PITH+ Principe, Interest, Tax and Heat, and 1/2 the condo fee, if applicable. And other debt such as car payments and credit cards. This means we can only use 40/44% of your Gross income to accommodate PITH + outside debt.
If the credit score is below 680, you may be required to stay within the lower TDS score of 40% – Keep your credit score clean and healthy.

Please note, I will be calculating the payment of credit cards and lines of credit as the account balance times 3% regardless of the demand payment.

Please note, I will be calculating the payment of credit cards and lines of credit as the account balance times 3% regardless of the demand payment.