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Tips to qualify for a home loan


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"With over 26 years selling Markham-area homes, John Procenko Real Estate has the experience to get your home sold. Visit for current listings in the Markham area. They are located at 165 Main Street North Markham, ON L3P 1Y3‎ (905) 472-7155.

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Tips to qualify for a home loan

  1. 1. Tips to Qualify for a Home Loan
  2. 2. IntroductionIt’s an understood rule of society that in order to buy ahome, you must take out a home loan or mortgage.However, to get to that point you must first qualify for theloan. Not everyone can march into a lending institution andjust get a mortgage.
  3. 3. IntroductionAnyone who wants a home loan for any type of home mustmeet the requirements of the lending institution and followsome important steps to get the home they want. Here issome information and tips to help you get the home loanyou want.
  4. 4. What Can You Afford?According to the Canada Mortgage and HousingCorporation, figuring out how much you can afford is thefirst step to qualifying for a home loan. All it takes is a fewbasic calculations to help you determine what amount willfit into your current lifestyle.
  5. 5. What Can You Afford?The first number that’s figured out is your Gross DebtService, or GDS. This determines the maximum amount ofhome-relayed expenses you can afford to pay on a monthlybasis. This number shouldn’t be higher than 32 percent ofyour gross monthly household income.The second calculation is called the Total Debt Service, orTDS. This estimates the maximum debt load that you’reable to carry each month, with the magic number beingless than 40 percent of your gross monthly householdincome.
  6. 6. Important FactorsSelect Mortgage Corporation states that four main factorsare involved when attempting to qualify for a mortgage inCanada.•Income Stability – Anyone who has applied for a home loan in the pastknows that a stable income is key. Whether you are looking forsomething in the higher-end Markham, Ontario real estate market, orsomething more modest, you need a stable income. Don’t besurprised if your lender asks for pay stubs or a couple years of taxassessments.
  7. 7. Important Factors• Credit History – Most lenders want to see a credit score of 680 or higher, and if yours isn’t ideal you may be eligible for programs to help build it back up again. Every lender or broker will take a look at your credit history as part of the qualification process.• Property Choice – As Select Mortgage explains, your choice of property plays a role because it is basically the lender’s security against the amount of the loan. Lenders want to know that the property is worth the loan amount, and that it could sell quickly if it ever came to that.
  8. 8. Important Factors• Down Payment – In today’s market, it isn’t always necessary to have a down payment, but in certain situations it is a requirement to qualify for the mortgage. In a ‘conventional’ mortgage, 20 percent is the normal amount and the lender won’t take out default insurance.
  9. 9. The Pre-Approval ProcessMost prospective homeowners these days get pre-approved for their mortgage before they go out looking fora home. It ends up saving a lot of time, and again, whetheryou’re in the Markham, Ontario real estate market or asmall town in Northern Ontario the concept is the same.Essentially, being pre-approved means that you have gonethrough the qualifying steps and you know how much of aloan you can get before you look for a home, rather thanafter you find one you like.
  10. 10. The Pre-Approval ProcessAccording to the Financial Consumer Agency of Canada,with a pre-approval you can:• Lock in an interest rate before you find a house in case they rise inthe meantime.• Figure out your mortgage payments ahead of time and work them intoyour budget.• Only look for homes that you know you can afford.
  11. 11. The Pre-Approval ProcessIt is important to keep in mind that the amount you are pre-approved for is the maximum and you don’t necessarilyhave to take on a mortgage that high. It’s also important toremember that the deal will still have to be approved,because even though you’ve been approved for an amount,the lender will want to know the property matches up.
  12. 12. The Pre-Approval ProcessYour real estate agent will often help you get started in thepre-approval process, but the common places to lookinclude:• Banks• Credit Unions• Mortgage Companies• Insurance Companies• Trust CompaniesFollowing all of the tips and going through the pre-approvalprocess will put you in position to buy the home you want,and start living the life you want to live.
  13. 13. AdviceWith over 26 years selling Markham-area homes,John Procenko Real Estate has the experience to get yourhome sold.Visit for current listings in theMarkham area. They are located at 165 Main Street NorthMarkham, ON L3P 1Y3 (905) 472-7155.