Are you looking to buy a home in Canada, but not sure how to qualify for a low down payment mortgage? With a low down payment mortgage, you can become a homeowner with a smaller investment. Here are some tips to help you qualify for a low down payment mortgage in Canada.
1. Check Your Credit Score
The first step to qualifying for a low down payment mortgage is to check your credit score. This is because lenders will look at your credit score to determine your eligibility for a loan. Aim to have a credit score of at least 600 before you apply for a mortgage.
2. Calculate Your Debt-to-Income Ratio
The next step is to calculate your debt-to-income ratio. This is the ratio of your total monthly debt payments to your gross monthly income. Lenders use this ratio to make sure you can afford the mortgage payments. Generally, lenders like to see a debt-to-income ratio of no more than 44%.
3. Get Pre-Approved
Once you have a good credit score and debt-to-income ratio, you can get pre-approved for a low down payment mortgage. This will give you an estimate of how much you can borrow and the interest rate you can expect. It will also help you to narrow down your search for a property.
4. Save for a Down Payment
Finally, you need to save for a down payment. Generally, lenders require a minimum down payment of 5%. However, some lenders may offer mortgages with a lower down payment requirement. Talk to your lender to find out what options are available to you.
Qualifying for a low down payment mortgage in Canada is possible. However, it’s important to do your research and prepare before you apply. Follow these tips to increase your chances of getting approved and becoming a homeowner.