Christine Buemann Mortgage Broker

There are 2 different ratios that lenders use in order to determine your maximum mortgage amount. (GDS) Gross Debt Serving Ratio : This pertains to the costs associated with owning the home. That includes your mortgage payment, property taxes and heat. Traditionally $100 flat rate has always been used for the heat amount, however since the mortgage changes last year that amount will vary by lender. No more than 35% of your gross income can be used towards the combined total of those expenses. If you have a credit score above 680, that is increased to 39%   (TDS) Total Debt Servicing Ratio: That includes all of the expenses listed for the GDS as well as any other monthly obligations. That could be credit cards payments, loans, child support ext. Keep in mind that for most revolving credit (credit cards, lines of credit ext.), they will use at least 3% of the balance as your monthly payment. No more than 42% of your gross income can be used towards all of your debts c...

As most people know, with the new regulations that took effect last month maximum amortizations for insured mortgages were reduced to 25 years. It is important to note that this will apply to any mortgage where less than 20% is being used for the down payment, but also for mortgages which are “bulk insured” (which basically means that the lender is still insuring it, but they are paying the premium). Some lenders are still offering 30 or even 35 year amortizations on their uninsured mortgages. You may ask yourself – why would someone want a 35 year amortization anyways? One of the most common reason is for qualifying purposes. If you were looking to qualify for a *$200,000 mortgage over 25 years , you would need at least $42,000 in income. If you lengthen the amortization to 35 years , you would only need approximately $36,000 in gross annual income. The key to this strategy is to set your payments from the first payment as the same amount as they would be with the 25...

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 hi...