First Time Home Buyer Guide:

Buying your first home can be a very stressful, anxious and time consuming process and experience from house hunting, to getting financing and moving in after your closing date. But before that you will need to make sure you can complete this step as smooth and fast as possible which is getting financing or getting a mortgage. Here are 5 things for first time home buyers to consider to make the financing process easier and less stressful….

1. Are you a Canadian permanent residence or citizen?

• In Canada right now, there is something called a non-resident speculation ban in effect right now and this is what it does. If you are not a Canadian permanent resident or citizen you will need to pay a 25% non-resident tax on top of your down payment and closing costs.
• As a result, I would recommend you to wait till you get a Canadian permanent residence or citizenship before you buy a home or buy your home with a spouse who is a Canadian permanent resident or citizen.

2. Not all income are the same

• Not all incomes are the same. Some income require at least 2 years history for the lender to accept the income for qualifying purpose. For example, business income, investment income and variable compensation like bonus or commission would require 2 years history for qualifying purpose
• Other type of income will only require couple of months or specific conditions met to be able to use the income for qualifying purpose like salary or rental income

3. Get your source of down payment ready

• Make sure to have records of your source of down payment ready as all lenders will collect, review and audit your source of funds for your down payment and closing costs. Most lenders will ask for 90 days transaction history with your name and account number on it.
• Banks will only accept gifted funds from immediate family members like your parents, grandparents and siblings. So if you have friends that is willing to loan you funds for your down payment. It will not be accepted by the lenders.
• Treatment for own source down payment, gifted funds and borrowed funds are different. Make sure to ask a mortgage professional to see which type of funds makes the most sense for you.

4. Debts can make or break your deal

• Having some debts are acceptable, but having too much debts can break your deal
• There are 2 types of debts; revolving and installment debts. Revolving debts are your credit card or unsecured line of credit balances and installment debts are your auto lease or loans. If you have to choose, try to pay off your revolving debts as they have a bigger impact on your ability to borrow more compared to installment debts for similar or same debt amounts.

5. Having a good credit score matters

• Before buying a home, please make sure you have a good credit score of 700 or higher to get better rate and condition exceptions
• If you have any messages on your credit report like consumer proposals, collections or bankruptcy, please contact me to discuss your mortgage options.

Hope this helps. If you have any questions please feel free to contact me:

Frankie Ho

647-982-0130

frankie.ho@calibermortgage.ca