- Documents You Need To Apply For A Mortgage
- Things You Need To Be Pre Approved For A Mortgage
- Free Printable Pre Approval Letter Templates [pdf] & Mortgage & Loan
- Mortgage Application Checklist
Documents You Need To Apply For A Mortgage – Buying new real estate or refinancing a mortgage in Canada requires a great deal of information. Before you hire a real estate agent, be sure to get your mortgage in order. This will save you from wasting each other’s time. There are five categories of documents you need; identification, proof of income, basic financial information, down payment confirmation and property details. If someone co-signs your mortgage, they will need to provide their ID and financial information. This article simplifies the process by helping you understand each document.
Read on to understand the typical documents required to get a mortgage in Canada. This article covers all the categories and explains the documents required for each category. However, some mortgage lenders may require different and additional information. At the end of this article is a mortgage document checklist to simplify your process.
Documents You Need To Apply For A Mortgage
Before you start applying for a mortgage, your lender will want to verify your identity. Very simply, you need to show:
Things You Need To Be Pre Approved For A Mortgage
This category is designed to prove to mortgage lenders your monthly income and ability to meet debt service ratios. Specifically, lenders will calculate your monthly mortgage payments to ensure they do not exceed 39% of your gross income. In addition, your income directly affects your maximum mortgage eligibility.
Your last payments will confirm your income. Mortgage lenders may ask for the last two to three payments, so make sure you have them on hand.
This form shows how much you earned in the previous tax year. Generally, lenders only require your T1 from the previous year.
The NOA summarizes that you have successfully filed your tax return with the Canada Revenue Agency. Lenders use it to determine debt-to-income ratios. You will need NOAs from the last two tax years.
Mortgage Loan Process: A Step By Step Guide To Home Loans
The T4 tax form shows how much you earned as an employee. Your T4A tax form will show any income such as pensions, severance pay and investment income. Self-employed people get a T4A and employees get a T4. You will receive these forms from your employer every year.
Also, make sure the letter is on company letterhead, signed by HR or a manager, and not older than 30 days. You can learn more in our guide to getting a mortgage loan application.
The most common mistake home buyers make is not budgeting for closing costs. These are one-time fees that must be paid at checkout. Generally, they cost around 3%-4% of the final purchase price. However, you can use a closing cost calculator to get a better estimate.
This category is designed to give lenders a brief overview of your overall financial situation. Specifically, they want to know your credit score and credit history.
What Documents Do You Need To Get A Mortgage Pre Approval?
Your credit score is a three-digit number that lenders use to measure your creditworthiness. To get a mortgage, you need a minimum credit score of 600 for banks. There are many ways to check your credit score for free.
A mortgage pre-approval letter shows that you have sufficient income and credit to meet the loan criteria. You can then use it to apply for a mortgage in Canada, which can qualify you for lower Canadian interest rates.
Your bank statements will show your net worth and help determine your total liabilities or debts. Mortgage lenders may request a full three years of statements. If not, the last month or two should be enough.
Your asset list shows the value of your investments and property. This can include cars, boats, real estate, RRSPs, and stocks. Lenders use this to calculate your net worth.
Free Printable Pre Approval Letter Templates [pdf] & Mortgage & Loan
This category is pretty simple – lenders want to make sure you have the funds to cover your down payment. There are several ways to prove your source of funds through investments, the sale of your previous home, or a gift. You don’t need all the documents listed below, just enough to prove you can pay the down payment. It also helps you understand whether you will get an insured or uninsured mortgage.
An insured mortgage has a down payment of less than 20% of the property’s value. An uninsured or conventional mortgage has a down payment of 20% or more. You can use a loan repayment calculator to understand the type of mortgage you will need.
This document confirms that the funds you are using for the down payment are liquid (ie, they are easily accessible). The statement must be less than 90 days old and must show the account holder, account number, account type and current balance. If you’re selling stocks in a taxable account, keep in mind the capital gains tax you’ll have to pay at the end of the tax year.
Existing homeowners can use the proceeds from the sale of their previous home as a down payment on their next home. If you are using the last sale of your home to do this, you will need to include a copy of the offer.
Free Loan Application Letter Template
However, if you can’t sell your home fast enough, don’t worry—you can use a HELOC or bridge loan to finance your down payment. As mentioned in the first category, find out how these loans affect your debt service ratio.
First-time home buyers in Canada can withdraw up to $35,000 from their RRSPs for a down payment. This RRSP is known as a homebuyer plan, which allows qualified individuals to withdraw the money tax-free. However, the funds must be returned to your account within 15 years.
A gift letter confirms that you will receive money for your down payment from an outside source, such as friends and family. The letter should contain the following:
Given the rising housing market prices in Canada, making a down payment is difficult for many. That’s why federal, provincial and municipal governments across Canada have created down payment assistance programs to help you buy a home.
First Time Buyer Mortgage
The final category is simple – lenders want to see the details of the property you are buying. Also, if you are selling another home, they will ask for information about that as well.
This is a signed contract between you and the seller. Lenders will want to see this because it provides details such as the date of purchase and the final purchase price.
The list is useful for mortgage lenders because it allows you to estimate your property taxes, utility bills, and condo payments (if buying a condominium). This is all the information needed to calculate the gross debt service ratio.
Legal description is the full legal description of the property, including the full address and postcode. You can find this information in your final purchase and sale agreement and in documents such as tax statements, title deeds, and more.
Mortgage Application Checklist
Most mortgage lenders in Canada require you to have homeowners insurance. This protects your home from repair costs due to water damage, fire, and more. You must provide a copy of the policy to the lender. If you are buying an apartment, you will need to prove that you have apartment insurance. If you need home insurance, the best way is to apply for online quotes. This will give you a feel for the prices and understand which policy you need. You can visit our page for a complete list of insurance providers in Canada.
Finally, lenders require you to obtain property insurance in Canada. This protects your lender if someone claims your property.
Those who are selling their existing home to purchase a new home must provide several additional documents to the mortgage lender. In particular, you will need to provide a recent mortgage statement and a legal description of the home you are selling.
If you want to get approved for a mortgage loan in Canada, a lot of documents are required. Mortgage lenders require proof of your identity, income and basic financial information. They must also confirm the source of the initial payment. You will also be asked to provide property details about the home, including legal descriptions and insurance policies. If you already have a mortgage, you can save time when buying a new home by transferring your existing mortgage.
Required Mortgage Documents
The calculators and content on this page are for general information only. does not guarantee the accuracy of the information provided and is not responsible for any consequences of using the calculator. You have found a new home and now you are ready to apply for a mortgage. Or you decide to stay put and refinance. It’s natural to feel a little anxious about the mortgage application process, especially if you’re a first-time home buyer.
I am confident that your loan officer at Maple Tree Funding will help make applying for a mortgage or refinancing your home as stress-free as possible. Below are the types of documents you will need when applying for a loan. This may vary by lender, but it should give you a good idea of the documents you’ll need.
Depending on the type of home loan you are applying for and your personal circumstances, you can
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