Getting a mortgage has been made easier by some lenders in the Canadian mortgage market. Many lenders are offering a Flex-Down mortgage product that allows people to get in to the housing market, without having to save up their entire down payment.
You will be able to qualify for the same low rates that you would receive with a traditional high ratio mortgage that qualifies for default insurance. This is a huge advantage for first time home buyers that are looking to get in to the market and free themselves from the shackles of monthly rent payments. Here is a summary of how the program works, and what it takes to qualify:
- The maximum mortgage amount is $1M.
- The amortization period cannot exceed 25 years.
- Fixed and variable rates are available, with terms from 1-5 years in length.
- 90-95% Loan to Value (meaning a 5-10% down payment on the property).
- You must have at least 2 years of credit history showing very good credit covenants.
- No previous bankruptcies or consumer proposals filed.
Mortgage lenders will always look at your debt service ratios in order to quantify your ability to repay your mortgage. In order to qualify for this program, your Gross Debt Service (GDS) and Total Debt Service (TDS) Ratios must be below 39/44% of your monthly gross income. Essentially, these calculations weigh your ability to make your mortgage payments to ensure that you aren’t overburdened financially. What the lender will do is add the borrowed down payment monthly repayment amount to your TDS ratio. If your TDS ratio still falls below 44% of your gross monthly income, you are in business!
Reach out to JGT Mortgages directly and we can help you calculate your debt service ratios and set you up with the best mortgage possible, tailored to your needs.