Fast forward a couple hours, the power has been restored, and it's back to business!
Common Mortgage Question
With more recent changes to government mortgage regulations as of January 1, 2018, applicants have contacted me with questions about how to qualify - and the most common question is if there's a certain income amount required for a mortgage.
The Short Answer
The short answer is no - there's no specific income threshold to qualify for a mortgage.
The Long Answer
However, there is debt ratio and other qualifying factors. To process your application and determine mortgage edibility*, we look at eligible income, affordability, liabilities, past credit history, down payment and the benchmark rate.
(FYI - The benchmark rate is the interest rate the government tells us applicants have to qualify at, rather than their actual interest rate...)
Eligible Income
Depending on the lender, we're able to use salaried income, hourly income, self-employment, Child Tax Credit**, court ordered child support, retirement income, and more.
Affordability
The amount of your income and down payment has to align with the purchase price of the house. An applicant with a $40,000 per year income is not likely going to be interested in a $1million house, nor would it be approved - unless of course the applicant has a substantial down payment!
Liabilities
In addition to purchase price, property tax and heating costs for the home, we also add in your other liabilities, which could include;
- Car Payments
- Lease Payments
- Deferred Loans (ie. Buy now pay later)
- Personal Loans
- Line of Credit Accounts
- Credit Cards
- Department Store Accounts
- Student Loans
- Alimony Payments
- Child Support Payments
- And more
All of this is combined into a formula - or what we call debt ratio - with past credit history, down payment and the property details to know where you're at for mortgage approval. It sounds complicated, but don't let that scare you. It's really not, and if you connect with a qualified Mortgage Professional, you'll be in good hands.
If I can answer a question for you, I'm just a phone call or email away!
Toll-free Direct 1-844-315-6609
sarahnm@mortgagegroup.com
*OAC
**Depending on lender and age of the child