What does my employment situation have to look like in order to qualify for a mortgage?

Ideally, you will have to show a 3 year history of employment, either with the same company, in the same line of work, or between school and your job after graduation. Full time employment is preferred, but some exceptions may be made for permanent part time employment or long standing contract work.

If your job is seasonal, temporary, or casual part time, often a co-borrower may be required.

What is Mortgage Default Insurance?

Mortgage default insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC) or Genworth to insure lenders against default on mortgages with a High Ratio, or less than 20% down. The insurance premiums are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.

What is the difference between a High Ratio and a Conventional Mortgage?

A high ratio mortgage is one where the down payment is less than 20% of the purchase price. A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price. Where there is 20% or more equity in the property, the mortgage typically does not require mortgage default insurance.

I have credit problems; can I still qualify for a mortgage?

In some cases, a mortgage applicant with previous credit problems may be approved for a mortgage by an alternate mortgage lender who specializes in higher risk applicants. Interest rates will be higher, and fees may apply in order to enter into a mortgage with an alternate lender. Terms for these mortgages are typically shorter to allow for transition into a traditional mortgage after a proven track record of paying your mortgage and improving your credit.

Uh-oh, I went Bankrupt in the past, can I still get a mortgage?

Depending on the circumstances surrounding your bankruptcy, and how long ago you were discharged, there are some lenders who would consider providing mortgage financing. Be aware that entering into a consumer proposal can often negatively affect your chances of getting a mortgage more than a bankruptcy because the duration of time you take to complete the consumer proposal process is often longer than the bankruptcy process is.

How will Child and/ or Spousal Support affect my mortgage application?

If child support and/ or spousal support are paid by you to another person, the amount of support you pay out is deducted from your total income before determining the size of mortgage you will qualify for.

If you receive child support and/ or spousal support from another person, the amount you receive may be added to your total income before determining the size of mortgage you will qualify for. Typically, there are ‘rules’ surrounding the amount of your total income the support equates to, as well as how you can verify that you do in fact receive the support (i.e. can you provide proof of regular receipt for a required period of time determined by the lender).

Can I get a mortgage to purchase and repair and/ or renovate a home?

Yes, provided specific requirements are met. For high-ratio financing, both CMHC and Genworth insured mortgages are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations, repairs, or improvements that the purchaser wants to make to the home. This type of mortgage is called a Purchase Plus Improvements Mortgage (PPI) and this option eliminates the need to finance the renovations or improvements separately. Some conditions apply, such as providing estimates of work to be done, pre-work value and post-work valuations, and a down payment amount based on the improved value of the home.

Can I use Gifted Funds as my down payment?

Yes, typically most lenders will accept down payment funds that are a gift from an immediate family member as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. Keep in mind though, that lenders will usually require the purchaser to have saved enough funds to cover their own legal fees (possibly 1.5% of the purchase price as an estimate) and may have to provide a 90 day bank account history to show the accumulation of these funds.

How can I get Mortgage Free Faster?

There are several tips to getting mortgage free faster:

Opt for an accelerated payment schedule;
Increase your payment frequency;
Make principal prepayments as allowed in your agreement;
Double-Up on your payments as permitted;
Select a shorter amortization at renewal time if you are comfortable with a higher payment amount.

Can I use my RRSPs to help me buy my first home?

Many first-time home buyers use their RRSP savings to help finance a down payment. If you are a first-time home buyer, the Home Buyers’ Plan (HBP) allows you to withdraw money from your Registered Retirement Savings Plan (RRSP) tax-free to make your down payment. The HBP is administered by the Canada Revenue Agency (CRA).

There are certain conditions you must meet to be eligible for the HBP, and specific requirements with respect to repayment of the funds withdrawn from your plan.

Are there Hidden Costs associated with buying a home?

Yes! In addition to the obvious down payment required to purchase your home, you must be prepared to pay for the following:

Legal fees, including disbursements, and land transfer tax (land transfer tax applies if this is not your first home purchase);

A home inspection is an expense you are responsible for. Do not waive your right to a home inspection, as it may uncover repairs or maintenance items required and will give you a written ‘report card on how structurally sound the home is;

Moving costs, including disconnection and reconnection fees;

You must have property insurance in place by the closing date in order for the lender to fund the mortgage, and you will be required to have paid your first installment;

Plan for those expected and unexpected costs that may arise, such as appliances you will need or meal expenses you may incur until your kitchen is set up.

What other [monthly] payments will I have in addition to my mortgage payment?

Aside from home maintenance, repairs, and upkeep, you will have the following financial obligations, in addition to your payment:

Property taxes, which can be paid monthly, 5 times per year, or annually;

Utlilities such as heating, gas, electricity, water, telephone, Internet, etc.;

Recreational expenses, transportation, and school related expenses;

Term Life Insurance to protect your mortgage balance and your home. Now that you have a mortgage and a home, take precautions to ensure that in the event something happens to you your family and the family home are protected, and your family can continue to live in the home payment free.


Don’t see a question here that you need answered? Contact me and I will answer any questions you may have, and I’ll add them to this list so others can benefit too!