How To Qualify For A Mortgage In Ontario?

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Becoming a homeowner in Ontario is a long and trying journey. It’s a multi-step process that requires a lot of self-learning and you’re likely to face many hardships. Getting approved for a mortgage in Ontario is one of them. With the recent hike in interest rates (over 5% as of July 2022), many first-time home buyers are feeling discouraged. But there’s no need to be. Home prices have dropped drastically in the last few months. The market’s gradually becoming a buyer’s market and buyers now have more options to choose from. Read on to learn more about the mortgage approval process in Ontario.

What’s the eligibility criteria for mortgage approval in Ontario? 

Eligibility requirements are different if you are a permanent resident and/or citizen of Canada or here on a temporary status. For permanent residents and citizens, your credit score should be 680 or higher to get approved by an “A” lender (typically a bank and they offer the lowest interest rate). If you’re a first-time home buyer, you need to have 5% down payment and if you’re a second-time buyer, it needs to be at least 20%. 

For non-permanent residents, you should be legally authorised to work in Canada, have a valid work permit, live in the property you purchase, and must put 10% as down payment. 

What do lenders look for when approving a mortgage application in Ontario? 

Four things matter the most to lenders when approving your mortgage application. Let’s take a look at them:

Income

Other than providing last two years’ of tax assessment, you must also prove you make enough money to pay your monthly mortgage payments on time. This income could be a full-time income, multiple part-time incomes, or income from your business or as a self-employed person. 

Debt

The lender will consider all types of debt that you have, which includes credit card debt, personal loans, student loans, child or spousal support, or car leases. 

Employment history

Proof of sustainable income throughout the years is important to mortgage lenders in Ontario. Mortgage applicants who have worked the same job for years or in the same industry are more likely to get approved than those who frequently change jobs and profession. 

For self-employed applicants, you must establish two years of work experience and support that with client invoices and tax assessments. 

Credit history 

With a credit score of 680 or higher, you will get approved by a bank in Ontario. Anything lower and you’re likely to pay a steep interest rate. Mortgage lenders will do a hard credit check to see whether you’ve missed any payments in the past. I highly recommend getting a paid credit report before you apply for a mortgage. Find if there’s any error in the hits you got in the past and take steps to correct them.


As a first-time home buyer, getting pre-approved is the best way to go. You know exactly how much and what kind of house you can afford. Use that information to decide which city in Ontario you’d like to purchase your first home in. 

For more real estate guides and tips, visit my real estate blog – Realtor Catherine Nacar

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