Buying a home is one of the biggest financial decisions you will ever make. Knowing your current financial situation helps ensure you buy a home you can comfortably afford.
Get your mortgage pre-approved
Obtaining a mortgage pre-approval can be a valuable first step to take before you begin your house search. To get your mortgage pre-approved, you will need:
- Your personal information, including identification such as your driver’s license;
- Details on your current job and proof of your salary;
- Information about your bank accounts, financial assets, current loans and other debts;
- An indication of how much your down payment will be and where the money will be coming from;
- Proof that you have enough money to cover the costs of closing the sale (usually between 1.5 to 4% of the cost of the house).
Trouble qualifying for a mortgage?
Sometimes, after everything has been taken into account, you may find that you cannot afford the house you want. If that happens, you may want to:
- Pay off some other loans or debts;
- Save up for a larger down payment; and/or
- Revise your target house price.
The importance of your credit rating
Your credit history tells mortgage providers about your financial past and how reliably you have paid your debts and bills. If you have no credit history, it is important to start building one — for example, by applying for a credit card. If you have a bad credit history, you will need to re-establish a good credit history by making debt payments regularly and on time. Consider getting some credit counselling if you have a history of poor credit or talk to your lender to discuss options.
CMHC can help!
Use these handy online homeownership calculators from CMHC to evaluate your financial situation, determine how much house you can comfortably afford, and what your monthly payments will be:
For more homebuying tips, visit CMHC's interactive Step by Step Guide at www.cmhc.ca. CMHC is Canada's largest provider of mortgage loan insurance, helping Canadians buy a home with a minimum down payment starting at 5%. Ask your mortgage professional about CMHC.
The information is provided by CMHC for general illustrative purposes only, and does not take into account the specific objectives, circumstances and individual needs of the reader. It does not provide advice, and should not be relied upon in that regard. The information is believed to be reliable, but its accuracy, completeness and currency cannot be guaranteed. Neither CMHC and its employees nor any other party identified in this Article (Lender, Broker, etc.) assumes any liability of any kind in connection with the information provided. CMHC stakeholders are permitted to distribute the materials at their expense. The above mentioned stakeholder organization is responsible for the distribution of this document.