Financing Criteria for Property Buyers: Do You Qualify?

The Basics

  • First, housing costs including the mortgage payment, taxes, utilities and strata fees typically should not exceed 32% of your gross income in order to be eligible for a mortgage on the property. If you have no other debt, an exception can be made up to 35%. Total debt servicing, including all other loans and credit payments should typically not exceed 40% of your gross income.
  • The minimum down payment to purchase property in Canada is 5% for homes with a purchase price less than or equal to $500,000.
  • For down payments of less than 20%, home buyers are required to purchase mortgage default insurance, from a mortgage insurer such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guaranty. These high ratio, insured mortgages are available for your primary residence with the minimum 5% down payment. The insurance cost increases as the percentage of financing requested increases. You will pay a premium for this mortgage insurance.
  • For homes with a purchase price greater than $500,000 and less than $1 million, lenders usually require a minimum down payment is 5% of the first $500,000 plus 10% of the remaining balance.
  • For homes with a purchase price of $1 million or more, typically, lenders require a minimum down payment of 20%.

For non-residents, the required down payments are slightly different.

  1. For the first $400,000, a down payment of 35% is typically required.
  2. For the next $300,000, a down payment of 45% is typically required.
  3. Then 50% is typically required for the remainder.

It should be noted that lending policies at Canadian institutions vary considerably. If you are interested if you qualify of a mortgage on the types and price ranges of properties you are considering, please contact our preferred mortgage brokers Karen Garret and Eileen Craig at Dominion Lending Centre – Sea to Sky Mortgages. #106-7015 Nesters Road, Whistler. Phone: 604-905-6359