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Home Mortgage Qualification FAQ

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  • Is a Federal Government Program that allows home-buyers to use $25,000 for each purchaser from his/her own RRSP.
  • You must not have owned a principal residence within the last 5 years.
  • You must intend to occupy your home as a principal residence.
  • The minimum repayment is 15 equal annual installments. This schedule can be accelerated.
  • The funds to be withdrawn must have been invested into the RRAP for a minimum of 90 days prior to withdrawal.
  • You must complete a Form T-1036.
  • The home must be located in Canada and is to be occupied as your principal residence.
  • You have from your own resources a down payment of at least 5% of the purchase price of the home.
  • Your mortgage payment must not exceed 32% of your gross household income. This includes payment of principal + interest + property taxes + heat + condo fees (if applicable).
  • You must be able to cover closing costs equivalent to at least 1.5% of the purchase price.
  • You meet the lender’s eligibility requirements regarding income, employment and creditworthiness.
  • Residential mortgages are available from thre types of lenders, and the type refers to the sort of risk that the lender will take. “A” lenders are your traditional banks and credit unions, while “Alt-A” or “B” lenders are other institutions that provide financing but accept slightly lower credit scores and slightly more tenuous debt-to-income ratios. Private lenders are individuals and institutions that service borrowers who cannot meet the numbers for “A” or “B” lenders but have enough money to put down to compensate for the additional risk.

    Try the Mortgage Qualifier Calculator on the Mortgage Calculators page to determine just how much house you can afford: https://amansadfinancial.com/calculators/

(Closing costs are approximately 1.5% of the Total Purchase Price.)

  • Appraisal Fee
  • Legal Fees
  • Title Insurance (if applicable)
  • Survey Certificate (if applicable)
  • Home Inspection (if applicable)
  • Tax Adjustment (if applicable)
  • Interest Adjustment (if applicable)
  • Property Transfer Tax (if applicable)

This number will depend on your income and your existing debt. Most lenders in Canada want to keep your debt-to-income ratio at no more than 40 to 45 percent, and so when you apply, the size of mortgage for which you receive approval will depend on how much money you make and how much you already owe on other notes, such as credit card payments and car loans.

See our Maximum Mortgage article which includes a link to the calculators needed to determine the size of the mortgage you can qualify for:

https://amansadfinancial.com/maximum-mortgage-borrowing-calculator/

If you can eliminate other debts, such as paying off a large credit card balance, or paying off a car note, or if you can increase the size of your down payment, then you can reduce your other debt, making room for a larger mortgage payment in your budget. You can also ask for a longer amortization period, such as 25 or 30 years instead of 15, making a smaller monthly payment.

Initially you just need to submit our Short No-Credit Check Form Below to find out if you qualify. https://amansadfinancial.com/prequalification/

Some additional qualification questions will be sent to help determine if a loan is possible. We specialize in private lending. If you are looking for an A, Alt-A or B lender, you can still complete and we can connect you with the appropriate non-private mortgage professional partner.

In order to verify the source of the down payment or other assets, the following additional supporting documentation may be required:

Requirements Based on Income Type:

Salaried Employees

  • Job Letter – Lenders use 100% of the income. Verification is made on company letterhead, signed by appropriate individual. If you are a recent hire, the letter should confirm that probation period has passed. Bonuses, car allowances, and other forms of remuneration should be mentioned in letter if applicable.

  • Pay Stubs – Many Lenders will also require your most recent pay-stub(s).

Hourly Employees

  • Pay Stubs- showing year-to-date income verification

  • T4’s and/or Personal Tax Returns (T-1 Generals)- 3 years to take an average

  • Notice of Assessment (NOA)- most recent to confirm no taxes owed.

Commission Income

  • T-4’s and/or Personal Tax Returns – 3 years to take an average

  • Job Letter- confirming position

  • Notice of Assessments (NOA)- optional depending on Lender

  • Self-Employed

  • Financial Statements of Company – 3 years average net income used. Depending on Lenders policies, The add-back of various personal expenses run through company may or may not be allowed. (examples of allowable add-backs- Depreciation, Amortization, Capital Cost Allowance).

  • NOA’s (Personal Notice of Assessments) – 2 year history

  • Personal Tax Returns (T-1 Generals showing personal net income) – 2 year history

Note:

  • Overtime will be used if there is a proven track record. 3 years evidence (T-4’s)

  • Bonuses – Once again, a 3 year track record required

  • Part-time job – should be in place for a couple of years before using additional income

  • Tips- Generally not recognized unless declared

  • Car Allowances – Varies from lender to lender

  • Alimony and Support – Evidence that payments have been made regularly and a copy of divorce agreement is required. Investment Income – must be received continuously. This source of income is limited to interest, dividends, or some type of ongoing revenue. Capital gains, which result from the liquidation of an asset is a 1 time occurrence and can’t be used.

  • With private lenders; bank statements may be required in lieu of to confirm personal or business cash flow.

In addition to the documents listed above, a credit score between 680 with a traditional lender. An Alt-A or B lender may be able to assist if your credit score is under 600 and everything else make sense. With a Private Lender, credit is not very important. A Private Lender’s decision is based primarily on the property, ability to make payments, common sense affordability, and good plan to transition to non-private lending in reasonable amount of time.

Initially we will respond within 24 – 48 hours to your prequalification inquiry. The time period between initial full application and funding with our Direct Private Lending Group is 3-5 days after all conditions have been met. Traditional and Semi-traditional lenders turnaround times vary depending on a variety of factors such as loan type (Purchase, Refinance, etc.), and time Season (Fall, Winter, Spring, Summer).

If you have a tax lien for federal taxes from prior years, that can influence a lender’s decision to approve your mortgage or not. It’s best to satisfy those liens before you start shopping for real estate, because you don’t want that lien applied to your new home. If you have adequate Equity, a Private Lender can provide a mortgage to rid of these prior to securing new financing.

The vast majority of mortgage loans are extended to one or two people. However, some will issue mortgages to three and even four people. See the Co-Signer Requirements FAQ page for more details:

https://amansadfinancial.com/cosigner-faq/

As long as you can make payments and satisfy the Debt Service Ratios (DSR) in Canada, you can take out a mortgage.

As long as your income provides enough to make a debt-to-income ratio of 40 to 45 percent, you have enough income, so you need to find the right mortgage to fit your revenue stream.

The lower the income, the lower the amount of mortgage you can take out. Shopping in the right neighborhoods to meet your budget is the best way – or, if you know that your income will be increasing soon, saving aggressively and continuing to rent for one more year in an affordable location will allow you to move into your desired home.

Deal with a “B” lender or a private lender. Amansad Direct Lending Group underwrites for a large network of private lenders throughout Canada who can help with restructuring bad debts, refinancing, providing bridge loans, or providing people with the ability move into their first home.

You can provide a notice of assessment as well as business records showing your revenue stream as a self-employed professional. You’ll also need to provide financial statements showing your savings, investments and other assets. For more info, see our Self Employed Mortgage article:

https://amansadfinancial.com/mortgage-financing-for-self-employed/

Please do not hesitate to call or email for any additional questions you may have.

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Daniel K. Akowuah | Mortgage Professional / DLG Underwriter
Toll Free: 1(877)756-1119 | PH:1(780)756-1119 | FX:1(877)238-7794
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