Applying for a Mortgage

Qualifying for a Mortgage

What makes someone a good candidate for mortgage qualification? Lenders take into account your down payment and your income:

Your Down Payment

The down payment is that portion of the purchase price you furnish yourself. The balance is obtained from a financial institution in the form of a mortgage. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting.

Learn more about making a down payment, including mortgage options based on the amount and strategies for funding your down payment.

Your Income

When determining your income, lenders look at two ratios:

1. Gross Debt Service (GDS) Ratio. No more than 30% to 32% of your gross annual income should go to "mortgage expenses"-principal, interest, property taxes and heating costs (plus maintenance fees for condo mortgages).
2. Total Debt Service (TDS) Ratio. TDS evaluates 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 your gross annual income. The combined incomes for you and your spouse are usually considered when determining this ratio.

Armed with this information, you can crunch your own numbers before applying for a mortgage. Or, your lender can do it for you when you get a pre-approved mortgage.

Calculate how much you can afford.

Take the first step…get pre-approved!

A pre-approved mortgage puts incredible power in your hands:

• You'll know how much home you can afford and how much your payments will be-so you won't waste time looking at homes that are out of your reach.
• You'll lock in your interest rate for 90 days if you select a fixed rate of interest, protecting yourself in case of a rise in rates (and if rates go down, you can take advantage).
• You'll be ready to make an offer when you find the home you want.
• And when you do make an offer, the seller will take it seriously, knowing you've got solid financial backing.

Learn more about getting pre-approved for a mortgage.

It's easy to get pre-approved at RBC Royal Bank^®.

Click here to apply online.

We'll have an answer for you within 48 hours of receiving your application.