Submitting a strong credit or mortgage application is essential to securing the best terms and rates and making the mortgage process quick and seamless. Lenders want to see a clear financial picture that demonstrates your ability to repay the loan.  It’s also important to apply with correct personal information (marital status, address history, and citizenship status).

Here’s what you need to make a solid application:

✅ Acceptable Credit History & Score

• Aim for a credit score of 680+ for the best rates and terms.  For insured mortgages (less than 20% down) 600 is the minimum credit score.  If a borrower’s credit score is lower than 600, a down payment of 20% or more will be required.
• Pay bills on time, reduce credit card balances, and avoid multiple credit inquiries before applying.
• Avoid missed payments, collections, or defaults on your credit report.
• We will review your credit report before applying and address any errors.

📋 Stable Employment and Income

• Show consistent employment history (ideally 2+ years in the same field).
• Provide proof of income, such as pay stubs, T4s, or  Tax Returns & Notices of Assessment for self-employed individuals.
• Canada Child Benefit can be used for income for children under 15.
• Work Pensions, Canada Pension Plan (CPP), & Old Age Security (OAS) can be used as income.

💳 Low Debt-to-Income Ratio

• Lenders prefer a debt-to-income ratio or Total Debt Service Ratio(TDSR) of under 44%, meaning your housing and monthly debt payments should be less than 44% of your gross monthly income.
• Pay down existing debt before applying to improve your DTI.

💰 Down Payment

• A larger down payment shows financial stability and reduces the lender’s risk.
• The minimum down payment in Canada is 5% for homes under $500,000 and 10% for the portion above $500,000.
• Canada’s Anti Money Laundering legislation (AML) requires that any money used for a down payment be confirmed and sourced for 90 days.  3 months of bank or investments will be required for each account holding any down payment funds.  Deposits over $3,000.00 will need to be sourced.
• Down payments can be gifted from an immediate family member or spouse.

📝 Complete Documentation

• Ensure your application includes all necessary documents, such as:
  • Recent pay stubs
  • T4s or T1 Generals (for self-employed applicants)
  • Bank statements (90 days) showing savings or down payment
  • Proof of additional income (child benefits, rental income, etc.)
  • Valid ID
  • Existing property documentation (property tax bill, mortgage statements, lease agreements for rental properties).

🤝 Co-Signer or Guarantor (if needed)

• If your application is weaker due to income or credit, a co-signer with strong financial credentials can help improve your chances of approval.

💼 Work with a Mortgage Broker

• A broker can present your application to multiple lenders and help you secure the best deal. They’ll also guide you on what’s needed to strengthen your file.

Key Takeaways

A strong mortgage application highlights your financial stability, responsibility, and ability to repay the loan. By organizing your finances, improving your credit, and providing thorough documentation, you’ll increase your chances of approval and secure the best mortgage terms.

Let us know if you’d like help preparing your application—we’d love to assist! 🏡✨