When approving borrowers for a mortgage, lenders look at two factors - down-payment and income.

If the down-payment is 25% or more, it's a conventional mortgage. If not, it's a high-ratio mortgage requiring default insurance from Canada Mortgage and Housing Corporation or GE Capital Mortgage insurance Canada (GE). There are two fees associated with mortgage insurance - an application fee and a premium. The premium is paid only once and can be added to the mortgage or paid separately at the time of closing. The premium amount varies depending on the amount of the down-payment and is based on the Loan to Value Ratio, which is simply the mortgage amount divided by the property value. The following chart shows the GE Premium Rates.

As for income, lenders look at two ratios. One is the "GDS" or Gross Debt Service Ratio. No more than 30% to 32% of a borrower's gross annual income should go to "mortgage expenses" - principal, interest, property taxes and heating costs (plus maintenance fees for condo mortgages). The "TDS" or Total Debt Service ratio looks at the gross annual income needed for all debt payments - house, credit cards, personal loans and car loan. Depending on the lender, TDS payments should not exceed 37% to 40% of gross annual income. The combined incomes of both spouses are usually considered, but not rental income.

Armed with this information, you can crunch your own numbers before applying for a mortgage or I can introduce you to a professional lender to look at your profile and possibly get a pre-approved mortgage. To start this process please contact me for a no obligation discussion. 

For a more in depth information about the mortgage process please read the guide "Mortgage Wise" published by the Canadian Bankers Association.