How to Get Approved for a Mortgage in Ontario: A Step-by-Step Guide

Getting a mortgage approval in Ontario isn’t as simple as it used to be. With tighter lending criteria and the mortgage stress test, it’s important to know how to position yourself for success.

Step 1: Check Your Credit ScoreLenders look at your credit score to determine your risk level. A score above 680 gives you access to better rates. If your score is lower, improving it before applying can help.

Step 2: Assess Your Debt-to-Income RatioYour total monthly debt payments (credit cards, car loans, student loans) should be manageable compared to your income. Lenders prefer a debt service ratio of under 44%.

Step 3: Save for a Down Payment

• 5% minimum for homes under $500,000.

• 10% on the portion above $500,000 up to $1M.

• 20% minimum for homes over $1M to avoid CMHC insurance.

Step 4: Get Pre-ApprovedA mortgage pre-approval gives you a clear budget and locks in your interest rate for up to 120 days. This makes you a stronger buyer in competitive markets.

Step 5: Work with a Mortgage BrokerA mortgage broker connects you with multiple lenders to find the best deal, instead of just one bank's offer. Brokers also help with unique situations, such as self-employed buyers or those with lower credit scores.

Common Mortgage Approval Roadblocks & How to Overcome Them:

Low Credit Score? Improve it by paying off debt and making payments on time.

Not Enough Down Payment? Look into first-time buyer incentives or a gifted down payment.

High Debt Load? Pay off outstanding loans before applying.

Conclusion:

The mortgage approval process can feel overwhelming, but with the right preparation and expert guidance, you can secure the best mortgage for your situation. The Mortgage Division is here to help you every step of the way.