Mortgages for First Time Home Buyers in Nanaimo

Mortgage qualification involves more than your income alone. A lender will generally review your income, employment, existing debts, credit history, down payment, available funds for closing costs and the property you want to purchase.

Monthly obligations such as car loans, credit cards, lines of credit, student loans and support payments can affect how much mortgage you qualify for because lenders consider how much of your income is already committed to other debts.

Before you start seriously shopping for a home in Nanaimo or elsewhere on Vancouver Island, reviewing these numbers can help establish a more realistic price range.

If your mortgage is with a federally regulated lender such as a bank, you will generally need to qualify using Canada's mortgage stress test. This means showing that you could afford the mortgage using a qualifying interest rate that is higher than the actual rate in your mortgage contract.

The purpose is to test whether your finances could handle higher mortgage payments. Some lenders that are not federally regulated may also use a stress test or their own qualification requirements.

If the stress test reduces the amount you can qualify for, possible options can include adjusting your home-buying budget, increasing your down payment, reducing other debts or reviewing whether another suitable lender has different qualification criteria.

No. A mortgage pre-approval is useful for estimating how much you may be able to borrow, but it is not a guarantee of final mortgage approval.

Once you find a property, the lender still needs to approve the home itself and confirm that your income, debts, credit, down payment and other information continue to meet its requirements. The property's value, condition, type and other characteristics may also affect the lender's decision.

This is why I recommend treating a pre-approval as an important planning step rather than a final approval to purchase any property up to the maximum amount shown.

A financing condition can provide important protection when you are making an offer to purchase a home. Even if you have a mortgage pre-approval, the lender still needs to approve the specific property and complete its final review of the application.

BCFSA warns buyers that making a subject-free offer can carry significant risk. If you make an unconditional offer and later cannot obtain the mortgage financing you expected, you may still be legally committed to the purchase.

Your real estate professional and legal advisor can explain the conditions that may be appropriate for your offer. From the mortgage side, it is important to leave enough time for the lender to review the property and complete the financing approval before subjects are removed.

Yes, eligible first time home buyers in Canada may be able to choose an insured mortgage with an amortization period of up to 30 years. This can lower the required monthly mortgage payment compared with a shorter amortization because repayment is spread over a longer period.

A longer amortization does not make the home less expensive. You will generally pay interest for longer, so the total borrowing cost can be higher. The right amortization depends on your cash flow, down payment, qualification and longer-term financial plans.

It is worth comparing both the monthly payment and the total borrowing cost rather than choosing an amortization based on the payment alone.