What Does a Lender Consider When Looking at Your Mortgage Application?

• Income and Job Stability – Your income determines how much you may borrow. In most cases, 32% of your gross income for salaried, non-self-employed or commissioned people is used to determine how much you can borrow to cover the cost of the mortgage payments, taxes and any applicable maintenance. All other debts (eg, car loans, credit cards and lines of credit, etc) must not exceed an additional 8% of your gross income. 
• Credit History – Your credit score must show that you pay your bills on time. If not, you may still be approved, but the interest rate may be higher than expected.

What you need to supply to the lender:

a)      Income Confirmation – For salaried individuals: letter of employment and your most recent pay stub.

b)      Down Payment Confirmation – The lender will require that you prove the source of your down payment. You will have to send in bank statements, statements showing RRSPs, stocks etc. You must show a three-month history of your accounts. If there are any large lump-sum deposits, you are likely to be asked to show where the deposit originated. For mortgages where your down payment is less than 20% of the purchase price, you will also be asked to demonstrate that you have access to 1.5% of the purchase price in your bank account. You must be able to show this through a credit card, line of credit, gift from family or savings in case closing costs run higher than expected.

c)       Contract of Purchase and Sale – This is a copy of the accepted offer of the home you intend to purchase and a copy of the MLS listing sheet.

Please contact Mortgage Advisor Cory Kline at 705-794-1283 or cory@ndlc.ca