Mortgage to Buy a Home

A pre-qualification helps you determine your borrowing capacity for the purchase of a home based on your income. A pre-approval determines your mortgage loan capacity more precisely based on several factors, including your credit score.

While this process results in the maximum mortgage amount you qualify for, it's not the most valuable part of the exercise. At the start, your best move is to familiarize yourself with what's at play and how it impacts the outcome. Knowing what the buttons and rules do let you plan and choose the outcome.

What if I ask my family for help or rent my future basement? Questions like these allow you to explore your options and crunch the numbers. Personal finance means getting personal: the less plug-and-play your situation is, the more you'll benefit from a one-on-one discussion

A mortgage is a loan secured by real estate, most often a home. When you make a purchase, you typically put forward part of the purchase price (basically, a down payment) and will obtain the rest from a bank. You then pay it back over the mortgage's lifespan (or amortization) with regular payments consisting of interest and principal.

A lender’s decision to grant a mortgage approval comes down to the property in question, the applicant's verifiable income, their credit history, and the source and amount of down payment the applicant can put down.

There are many moving parts to consider, so the best first step is to get pre-qualified.

When budgeting, there are three things you should consider:

1. The down payment. Your minimum down payment depends on what and where you're looking to buy, your income type and the amount you earn.
2. Closing costs. These costs cover land transfer taxes, legal fees, disbursement expenses, and more.
3. Relocation costs. These costs may include hiring movers, new appliances, furniture, and more.

While you calculate your minimum down payment and estimate your closing costs, your out-of-pocket moving costs are guesstimates at best, and you should keep them to a minimum.

Together, we can run some basic numbers to give you an idea of how that can look.

No. It comes down to how much income you make, how you report it, and who pays your taxes. How stable your income is and how long you've been earning at the current rate may also come into play.

Some banks are purely interested in applicants who fit a specific criterion. In contrast, other banks will take a more common-sense approach that focuses on your ability to make regular payments while still having enough income to live.

Some types of support payments, like child support or spousal support, are eligible income, while others, such as unemployment insurance or disability benefits, are ineligible at most lending institutions.

Regardless of your choice, you'll be fine if you deal with a professional. Give preference to experience, determination and ability to communicate clearly with your team.

Buying your first home will come with challenges and a relatively steep learning curve. Pick your team well – be it a real estate agent, mortgage broker, or lawyer. Select your team early on in the process and stick with them. After all, you’re partners! Always ask for clarity and transparency wherever possible. Take notes, and don't be afraid to ask questions.

Aim to have a working household budget, and remember: we can help you get the best mortgage at the best rate, but you're the one who ultimately has to live with it. Be sure to take the time to evaluate your options carefully to set yourself up for success.