How to Qualify for the Largest Mortgage Amount

With the high cost of property in the Metro Vancouver area, how does one qualify for the largest possible mortgage amount? Here are a few tips:

1. Have a good credit score - Having good credit has its privileges. Mortgage insurer guidelines now allow borrowers to spend up to 44% of their gross income on debt payments (including the mortgage on your new home). Not all lenders are implementing this guideline so you do need to shop around to find a lender that will finance you to this limit.
2. Take an extended amortization - An couple with a combined income of $60,000 can increase their mortgage qualification from $330K to $400K by increasing their amortization from 25 years to 40 years.
3. Minimize your other debt payment - Any payments you make to other creditors (auto loan payments, credit card payments, etc.) will reduce the amount you are allowed to borrow. You have two options: (a) You can fully pay these debts; or (b) apply to reduce the payments (possibly by getting a consolidation loan from your bank).
4. Consider purchasing a property with a rental suite - A portion of the rental income can be treated as a reduction to your mortgage payments resulting in a significant boost to the amount you qualify for.
5. Use a mortgage broker - Credit policies differ among lenders. Consequently, the amount you will get pre-approved for will depend on the lender you go to. This is why you need a mortgage broker. We know which lenders are providing the most favorable terms so you can get the mortgage amount that is right for you.

With these new guidelines, many of the first time home buyers that come through our doors are pleasantly surprised by the amount they qualify for. In many cases, they have been to their bank and they have been told that they qualify for much less. Of course, we don’t suggest that you buy a property that will stretch you financially. We believe that our job is to let you know how much you will be approved for. It is your decision as to whether you think you should go to the limit.