Residents and Non-Residents can finance property in British Columbia. Buyers can work directly with a bank or with a mortgage broker.
Criteria for Financing:
- Housing costs including the mortgage payment, taxes, utilities and strata fees cannot exceed 32% of your gross income. If you have no other debt, an exception can be made up to 35%. Total debt servicing (TDS), including all other loans and credit payments cannot exceed 40% of your gross income.
- In a conventional mortgage, a down payment of 25% is required. The exceptions to this are high ratio, insured mortgages that are available for your primary residence with a minimum of 5% down payment. The insurance cost increases as the percentage of financing requested increases.
Higher Valued Properties
With higher valued properties, lending values decrease as the value of the property increases:
- For a property valued at or below $500,000, the conventional down payment of 25% is required.
- For the next $250,000, a down payment of 40% is required.
- For the next $250,000, a down payment of 45% is required.
- And then 50% of the remainder.
For example, with a purchase price of $800,000, the maximum mortgage allowed is $552,500. This applies to Canadian residents only, either owner occupied or investment properties.
For non-residents, the required down payments are slightly different:
- For the first $400,000, a down payment of 35% is required.
- For the next $300,000, a down payment of 45% is required.
- Then 50% for the remainder.
For example, if the purchase price is $800,000 the maximum mortgage allowed is $475,000.
Other Points of Interest:
Your Total Debt Service (TDS) is the percentage of gross income needed to cover monthly payments for housing and all other debts and financing obligations. The maximum TDS is anywhere from 40%-44%, depending on your credit score. However, rental Income earned from the property can be included in the equation and can increase your mortgage limit.
CLICK here to see how this is calculated.
Getting prequalified for financing is free and takes very little time. Simply submit an application and your mortgage broker can give you a good idea of how much you qualify for.