Pre-qualification gives you an estimate of what you may be able to borrow, based on basic financial details.
Pre-approval, however, involves a credit check and confirms the specific mortgage amount you’re approved for, giving you a more reliable budget for house shopping.
In Canada, the minimum down payment depends on the home’s purchase price:
- 5% for homes under $500,000
- 10% for the portion between $500,000 and $1 million
- 20% for homes priced over $1 million
Yes! We know that many Canadians face challenges in qualifying for loans and other services due to their credit score. However that does not mean no solutions exist.
The rates hinges on your individual financial profile and can fluctuate depending on the lender's criteria. Certain lenders may prioritize factors beyond credit scores, such as income stability and employment history, in their assessment process. Typically, the cost of a loan correlates with the perceived risk associated with the borrower, which encompasses a multitude of considerations.
The amount you can borrow depends on your income, credit score, debt levels, and the lender's criteria. Many Canadian lenders follow the Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to determine how much you qualify for.
Yes, but there may be penalties or fees, depending on the terms of your mortgage. Some lenders allow limited extra payments or lump-sum payments without penalties, so check your agreement for prepayment options.
A higher credit score can help you secure a better interest rate and more favorable terms. Lenders view credit scores as indicators of financial responsibility and repayment ability. Typically, a score above 680 is ideal for favorable rates.
Besides the down payment, you should budget for closing costs, typically 1.5%-4% of the home’s price. These may include legal fees, land transfer tax, property insurance, and title insurance, among others.
Self-employed individuals often need to provide additional documentation, such as tax returns, financial statements, and proof of income stability. Lenders may require a larger down payment or higher credit score for self-employed applicants.
