TOP 5 REASONS PEOPLE DON’T QUALIFY FOR A MORTGAGE There are many reasons for getting declined, here are the most common. 1. LACK OF DOWN PAYMENT: The minimum down is 5% of purchase price. This amount must be saved, not borrowed. However a gift from immediate family member is acceptable. It can also come from your RRSP’s. 2. INSUFFICIENT INCOME: Often people purchase a home thinking they can afford it when they can’t. This is a waste of everyone’s time. Get pre-approved first, and not by a bank because it is worthless since the banks do not check your credit or verify your income. We do so you can count on our pre-approvals. 3. NEW MORTGAGE RULES: If you have less than 20% down the maximum gross debt service ratio allowed is 39% of your income versus 32% for less than stellar credit. Including consumer debt the ratio is 44% of income, 40% for poorer but still acceptable credit. 4. CREDIT ISSUES: If you have been late on credit card, loan, cell payments your credit score will go down. If any delinquency has been sent to a collection agency your score will drop like a stone. Too many credit inquiries in a short period of time by you also lowers your score and will stay on your report for 7 years. The banks will automatically decline you. If the issue is isolated or a blip with overall good history, we can help you. KNOW YOUR SCORE. The banks will not advise you on credit. We do. Will pull it for you and give you professional advice to set you straight. 5. TOO MUCH DEBT: Many people have bad spending habits and are poor with finances. You can no longer refinance your home above 80% loan to value to payoff high interest debt. Most do not understand what their capacity or limits to borrowing are. When buying a house you can get approved only to be declined later if you make purchases (new car, truck etc) before you close your purchase. We see this happen too often. Effectively your debt service ratios get checked again prior to closing and they have become too high. We always advise our clients not to buy any big ticket items until after they are in their new home. If you are a first time home buyer (even if you are not but have some debt load), it is essential that you come to us first (not a bank) to review your credit situation. We are experts and will give you invaluable advice going forward.