Residential Mortgages

Lenders compare your housing costs and your total debt payments with your gross income. These are the gross debt service (GDS) and total debt service (TDS) ratios; for an insured mortgage the usual limits are 39 and 44 percent. The ratios are calculated at the stress test rate, not your actual rate. A pre-approval gives you a working number. Use our calculator for a quick estimate of the payment.

Five percent on the first $500,000 of the purchase price and ten percent on the portion above that, for homes under $1.5 million. At $1.5 million and above, the minimum is twenty percent. With less than twenty percent down, the mortgage needs mortgage default insurance.

It is the federal rule that you must qualify at a rate higher than the one you will actually pay. The minimum qualifying rate is the greater of 5.25 percent and your contract rate plus two percentage points. It applies to every insured mortgage and to uninsured mortgages from federally regulated lenders such as the banks.

The term is how long your rate and conditions are fixed by contract, often one to five years. The amortization is how long it would take to repay the whole mortgage, commonly 25 years, or up to 30 years in some cases. At the end of each term you renew, switch lenders or pay off the balance.

A fixed rate keeps your payment the same for the term. A variable rate moves with the lender's prime rate, so your payment or the share of it that goes to principal can change. The penalty for breaking the mortgage early is also calculated differently. Through RMA Mortgages, both are compared with your plans and your comfort with change.

They are the extra payments a lender lets you make each year without a penalty, such as a lump sum of a set percentage of the original balance or a higher regular payment. The limits differ from lender to lender, so they are compared along with the rate.

Yes. Lenders usually ask for two years of Notices of Assessment and business financial statements. Some lenders also offer programs based on stated income or bank statements, often with a larger down payment. Through RMA Mortgages, your documents are matched to the lenders that accept them.

Often, yes. Several lenders have programs for permanent residents and some work permit holders with a limited Canadian credit history. They may ask for proof of employment in Canada, a larger down payment or references from your bank abroad. Federal rules on property purchases by non-Canadians also apply, and we confirm which ones affect you.

There are options beyond the major banks, including alternative and private lenders, usually at a higher rate and for a shorter term. We explain the total cost and a plan to move back to a standard mortgage when your credit improves.

All mortgages are processed by Gurpreet Dhillon, The Mortgage Masters Team, RMA Mortgages, FSRA Licence #10464. Marwah Amer Capital Partners is not itself a licensed mortgage brokerage. The same notice appears in the footer of every page.