09/29/2021
Costs to purchase a home in Canada
So you are tired of paying rent and want to purchase a house. Financially, here are the requirements to qualify for a mortgage as of today:
5% down minimum up to $500k.
Any amount over $500k, you will need 10%
Any amount over $750k, you will need 15%
Any amount over $1m, you will need 20%
1.5% of the purchase price in cash for losing costs (land transfer taxes, legal fees, etc.)
So if you are looking at a home for $1.2m
5% on the first $500k. =$25k
10% on the next $250k =$25k
15% on the next $250k =$37.5k
20% for over $1m =$40k
1.5% closing costs =$18k
Total minimum amount needed for a $1.2m property = $145,500
You will also need to have 1 person with a credit score of 680 or greater & 2 credit products for longer than 3 years (credit card, car loan etc.).
Ideally, you will have been working at the same place for 3 years or more, any less and you will need to give details of previous employers.
Ideally, you will have been living at the same place for 3 years or more, any less and you will need to give details of previous addresses.
Your Gross Debt Service (GDS) ratio which is: mortgage payment, property tax payment & heating bill, must be less than 35% of your combined gross (before taxes) earnings
Your Total Debit Service (TDS) ratio which is: your GDS ratio + all other regular payments (car loans, credit card payments, personal loans, other mortgages, etc.) must be less than 42% of your combined gross earnings.
Lastly, these ratios must be calculated at a mortgage interest rate of 5.25%; this is the stress test the government has put into place.
