Everything You Need to Know About Mortgage Preapprovals

Mortgage Preapprovals

Moving. Whether you’re a renter or a land owner, moving is kind of the worst – but it’s worth it to find a place to call home. So much so that in Quebec, they actually have a designated moving day called Jour du Deménagement. Moving Day originally started as a humanitarian act by the French to ensure farmers weren’t being evicted in the winter months and it stuck. Every year on July 1^st, Quebec residents spend the day moving.

So what does this have to do with mortgage preapprovals? Well summer is the time to move and at Integris, we want you to be prepared so we’ve written up everything you need to know on getting preapproved for a mortgage! Of course, everyone is different and situations may vary depending on the amount of the down payment, credit score, etc. but these are the basics that will help you move in the right direction. 

What is a mortgage preapproval?

Being preapproved for a mortgage gives you the security of knowing that you can shop – we’ll run the numbers and tell you what price range you can shop in so you can find a place to call home.  

What do I need to get preapproved?

There are two different kinds of mortgages (conventional and insured). Conventional is when you have the traditional 25% down payment, insured is when you have less than the 25% traditional down payment (you can be insured for as little as a 5% down payment).   

What we check:

• Employment info:
  • If you’re employed by an employer, we need:
    • Last year T4
    • Current up-to-date paystub
  • If you’re self-employed as a sole proprietor, we need:
    • 3 years full tax returns
    • Proof of no income tax owing to CRA
  • If you’re in business for yourself, but not a sole proprietor:
    • Come in and talk to one of our lenders about income verification for preapproval requirements
  • Credit score
  • Assets
  • Liabilities
  • Total debt servicing – what’s this? We take your total monthly gross income and divide it by your total monthly payments. The results will tell us if you will be able to maintain a mortgage along with all your other payments.
  • Gross debt servicing – what’s this? We take the cost of your mortgage payment, heat, and taxes and divide it by your monthly gross income. Learn more about TDS and GDS on conventional mortgages by talking to one of our mortgage specialists, or for insured mortgages visit CMHC.

What do I need for a conventional preapproved mortgage?

If you have a 25% down payment, this is considered a traditional mortgage. Here’s what you need:

• Minimum 25% down payment (depending on qualifications)
• Proof of down payment

What do I need for an insured preapproved mortgage*?

If you have less than the 25% down payment, this is considered an insured mortgage and we will insure the mortgage through either CMHC or Genworth. There is an insurance premium that will be charged (see more about CMHC or Genworth premiums). You will also need:

• Minimum 5% down payment
• Proof of down payment

*please note that preapproval on insured mortgages is contingent on CMHC/Genworth approval.

5% Down Payment

The 5% down payment is a way for home owners to achieve ownership without having to save in an increasing market. Whether you have 5% down for your first home, or your tenth, CMHC is there to insure mortgages under the conventional 25% down payment threshold. You may own multiple properties, but under the CMHC guidelines, you may only have one insured mortgage at a time.

*Please note at this time, Genworth currently allows more than one insured property.

Urban vs. Rural

When you’re buying a house, location matters. Whether you’re buying urban or rural, one thing is certain, an inspection is highly recommended. This is a cost to the buyer and typically costs about $400 in northern BC.

A few extra things we need if you’re buying rural:

• Lagoon/septic passed
• Water potability tested

Appraisals

There are a couple different types of prices associated with a house: the listed price, the city assessment, and a certified appraisal to name a few. Integris does not use appraisals older than six months; to determine the property value for appropriate lending limits, we will take the lesser of the appraisal or purchase price.

First Time Home Buyer

If you’re a first time home buyer there may be other options available to you. You may be eligible for the first time home buyers property transfer tax. There are ways to strategize to make the most of your first home purchase so make sure to speak to one of our retail lender to assist with your first home purchase.

Borrowing RRSPs

Utilizing your RRSP deposits is one way that home buyers can raise the down payment for their home purchase. The Government of Canada has a ton of information and repayment details which can be found on their website.

Final Steps

Buying a home for the first time can definitely be challenging, whether you’re getting a conventional or insured mortgage in an urban or rural area, our retail lending team has all your needs covered. For preapproval on your mortgage, stop by one of our branches today or request an appointment online and we will be happy to help you on your steps to finding a place to call home.