Mortgage Qualification

[atta]

I make $55k (pretax) at my job and make another $60k (post tax) outside of my job through other streams. I have no debt and no monthly payments aside from rent. I am interested in buying a ~$300k condo to live in but my additional income on top of my job won't be recognized by the banks when qualifying for a mortgage. I have $35k saved up on a downpayment currently. Is there any way to qualify for a mortgage of roughly $250k given my $55k stated annual income? Would mortgage brokers be able to help me out? I'd be interested in renting out 1 of the rooms in the condo as well, although I'm told that wouldn't factor into my mortgage app either.

Any advice?

Also this would be in Toronto... any ideas on where the downtown condo market is going in the near term? Continue to rent?

Thanks.

[jerryhung]

I wish I have $60K after tax, as "other income" ;)

250K vs 55K ~ 5:1, I don't know, may be tougher, but doable

[TrevorK]

I was told by my mortgage broker that if I could provide evidence that my secondary income was steady he would be able to find a lender that would take it into consideration.

I never had to go through with it since my primary income was high enough though, so I can't say if it's as easy as he says.

[swales]

A bank will most likely reject you if you go to them directly, but a Broker should be able to help you out.

[Hubster]

All banks will request a two year history of your "other" income along with a Notice of Assesment to prove no taxes are outstanding on those amounts.

Yes there are lenders who will look at your additional income with some type of proof (bank deposits, etc) to help you qualify you for the mortgage amount. But you need to be aware that this may be more expensive, rate wise, than someone who can qualify without the "hard to prove" income.

If as stated, you have at least 10% down, that will certainly help your situation. PM me if you need more info.

Good Luck,

Hubster.

[gei]

With a recognized income of $55k you should be easily approved for a 250k mortgage. Just tell the banks you want to amortize over 40 years, it will drastically increase the amount they approve you for.

Then just take advantage of the pre-payment options (ie the 20% overpayment and 20% lump sum payment) to pay back extra principal.

[rogerrabbit168]

banks usually qualify a ratio of 1:3, or is it 3:1, well anyways, its three times your salary, but like you say, your other income stream is not solid, they will be basing on your 55k, therefore it will be pretty tough to get a mortgage from the bank, like others have said, try a broker

[atta]

With a recognized income of $55k you should be easily approved for a 250k mortgage. Just tell the banks you want to amortize over 40 years, it will drastically increase the amount they approve you for.

Then just take advantage of the pre-payment options (ie the 20% overpayment and 20% lump sum payment) to pay back extra principal.


How do these options work?

My extra income isn't guaranteed at all and wont' be recognized at all by the banks... so from a bank's perspective assume it doesn't exist. And no, it's not from illegal activity.

[Diamondog]

I make $55k (pretax) at my job and make another $60k (post tax) outside of my job through other streams. I have no debt and no monthly payments aside from rent. I am interested in buying a ~$300k condo to live in but my additional income on top of my job won't be recognized by the banks when qualifying for a mortgage. I have $35k saved up on a downpayment currently. Is there any way to qualify for a mortgage of roughly $250k given my $55k stated annual income? Would mortgage brokers be able to help me out? I'd be interested in renting out 1 of the rooms in the condo as well, although I'm told that wouldn't factor into my mortgage app either.

Any advice?

Also this would be in Toronto... any ideas on where the downtown condo market is going in the near term? Continue to rent?

Thanks.

A friend of mine just got a mortgage for $220,000 on $50,000 income through PC Financial.....I am not sure if that s all she could get or all she wanted.

[Diamondog]

How do these options work?

My extra income isn't guaranteed at all and wont' be recognized at all by the banks... so from a bank's perspective assume it doesn't exist. And no, it's not from illegal activity.

WOW that sucks having that much income as non recognizable by the bank! Nice to have the income though :D

[Hubster]

How do these options work?

My extra income isn't guaranteed at all and wont' be recognized at all by the banks... so from a bank's perspective assume it doesn't exist. And no, it's not from illegal activity.

It depends on what type of work it is you do to gain your extra income, whether you are an employee or self-employed, and how you get paid. The higher your beacon score, the less documentation requried.

Bank Criteria:

1. If you are an employee - you will need to show paystubs showing year to date income and a letter of employment. Non-guaranteed income will require the above plus most recent years notice of assesment (NOA). You must not be on probation and they like to see at least a two year salary average.

2. If it is self-employed income they will be looking to confirm at least two years activity through NOA's and the Articles of Incorporation for your business. Any taxes owing to Rev Can must be up to date.


If you cannot provide any of the above, alternative lenders would like to see some indication of income. If it is through cheques then some type of verification must exist. If it is cheques or cash, then they may settle for bank deposits to your personal or business accounts for at least one year.

If your beacon is high enough (680+), you could also go with a "stated income" program for your additional income. These will typically only run to 75% financing of the value of the property, but options exist which could get you up to 85% fairly easily.

As noted above, you regular income alone and zero debts almost qualifies you for a $265K mortgage ($300K purchase minus down payment) at 25 years. You are a "done deal" at 30 years. Any knowledgable broker can have you qualified in minutes.

Good Luck!

Hubster

[gei]

How do these options work?

My extra income isn't guaranteed at all and wont' be recognized at all by the banks... so from a bank's perspective assume it doesn't exist. And no, it's not from illegal activity.

it doesnt matter... just tell them you want to amortize over 35 or 40 years.. these types of mortgages are offered by all the banks now, and are fully insured by CMHC. like i said, you should easily be approved for a 250k mortgage with ONLY the 55k income. any other income you get you can use to make bigger mortgage payments.

[mystical2003]

How do these options work?

My extra income isn't guaranteed at all and wont' be recognized at all by the banks... so from a bank's perspective assume it doesn't exist. And no, it's not from illegal activity.

If it's not illegal, and you are doing it legit, then it should be reported to the gov't and you should be receiving a notice of assessment every year with this income. Show that to the bank and you will be approved.