If you are putting less than 20% down then your mortgage will be insured through CMHC, Genworth or Canada Guaranty. They all have a strict set of qualifying guidelines and most lenders follow these guidelines for borrowers with more than 20% down as well. There are 2 different ratios that they consider along with your credit score.
The first is the Gross Debt Servicing Ratio (GDS). You can figure this out by breaking down your gross annual income to monthly. Only 35% of your income can be used towards your mortgage payment, monthly property taxes and heat (they usually use $100 for heat).
The second is the Total Debt Servicing Ratio (TDS). For this calculation, they also use your gross income and new mortgage payment, property taxes and heat but this time they factor in all of your other debts including credit cards, loans, child support ext. Generally no more than 42% of your income can be used towards all of your debts combined.
For those who have exceptional credit (680 or higher) they do not factor in the GDS, and the TDS can be as high as 44%. As a general rule, it is best to aim for under 40% TDS so that you are not pushing your limit too closely and there is room for potential adjustments.
For those whose ratios exceed those parameters, there may be alternative financing sources available or a creative solution to reduce the ratios.
Contact me for more information on mortgage qualification guidelines.
http://www.christinebuemann.com/
The first is the Gross Debt Servicing Ratio (GDS). You can figure this out by breaking down your gross annual income to monthly. Only 35% of your income can be used towards your mortgage payment, monthly property taxes and heat (they usually use $100 for heat).
The second is the Total Debt Servicing Ratio (TDS). For this calculation, they also use your gross income and new mortgage payment, property taxes and heat but this time they factor in all of your other debts including credit cards, loans, child support ext. Generally no more than 42% of your income can be used towards all of your debts combined.
For those who have exceptional credit (680 or higher) they do not factor in the GDS, and the TDS can be as high as 44%. As a general rule, it is best to aim for under 40% TDS so that you are not pushing your limit too closely and there is room for potential adjustments.
For those whose ratios exceed those parameters, there may be alternative financing sources available or a creative solution to reduce the ratios.
Contact me for more information on mortgage qualification guidelines.
http://www.christinebuemann.com/
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