There are thee main components to qualifying under these guidelines. The first is your credit score. You must have a minimum beacon score of 680 to be considered for this product. A beacon score is a credit score that reflects your credit history. There are many factors that determine your beacon score. The scoring system takes into account how many inquiries have been made on your credit bureau, your repayment history with loans, lines of credit or credit cards, and how close your outstanding balance is to your credit limit on those accounts (these are not all they things taken into consideration but some of them). To find out your beacon score and see if you have the magic score of 680 or above, give us a call at 647-773-9001 and we can check for you.
The second component is your income versus your monthly payments. CMHC determines whether or you qualify based on two ratios: Total Debt Services Ratio (TDS) and Gross Debt Service Ratio (GDS). These ratios reflect how much debt you have in comparison to your income, and your ability to support the debts. TDS cannot exceed 40% and GDS cannot exceed 32%. To find out if you fall within the required ratios, call us at 647-773-9001 and we can calculate them for you.
The third component is you qualify for the 5 or 7 year rate with CHMC mortgage insurance program. As this will be considered a high ratio mortgage and would fall under the CHMC program.
There are other alternative lending programs out there that do not lend using CMHC criteria. These programs cater to people who have slower credit history or do not have enough income to support the require CMHC ratios. There is also 100% financing available by going this avenue, but the interest rate is much higher. It may not be as attractive as the products offered under CHMC's guidelines, but it may be a better option than continuing to rent. In fact, many people go this route, selecting a smaller term, and using that time to re-establish their credit so that they can qualify for a CMHC product with their mortgage is up from renewal.
In both cases, the interest rates vary with each application and property being considered.
To find out more, and start paying your own mortgage rather than your landlord's mortgage, contact us and let a mortgage specialist guide you through the process.
Written by Salim Moorani, BA,MCP Mortgage Broker LIC#M140543. Salim Moorani is a licensed mortgage broker with Centum Mortgage Squad and can be reached at Salim_Moorani@