12 Feb 2019
How do you know when you’re ready to buy house?
1. You have saved enough for the down payment
Most people think the biggest hurdle to overcome when buying a house is saving up a down payment. You normally need to save at least 5% of the purchase price as a down payment. This down payment shows that you have some of your own money invested in the house which gives the lender some comfort that you will protect your investment. Having the ability to save money is a great first sign you might be a future homeowner.
2. You have good credit
Having perfect credit isn’t a requirement to get approved for a mortgage in Canada. However, if your credit score is at least 650, your odds of getting approved are much higher. If your score is at least 620, you may qualify for a mortgage with as low as a 5% down payment. Lenders look at more than just your credit score. If you have not missed a single missed payment in the past 12 months this is a great sign that you’re more likely to qualify.
3. You can afford the mortgage payment
The amount of home you qualify for is tied to your debt to income ratio. It’s typically recommended to keep you spend no higher than 35% of your monthly income on housing related expense (Mortage, property tax and heating). If you’re renting a home, chances are that your mortgage payment will be close to what you’re paying in rent. Use our calculator to find out what your mortgage payment will be and how much you can afford. How much house can you afford calculator
4. You have steady employment
If you have been in the same job with the same employer for at least 1 year, you’re financially stable enough to have a mortgage. Having steady employment history is a good indicator that you’re ready to buy a house.
5. You don’t plan on moving to a new city anytime soon
We all dream of living somewhere different. Buying a house is better financially than renting, but only if you plan on staying put for 3 years. If you don’t have any immediate plans on changing cities, then buying is a great option for you. There’s a chance that home you buy today will increase in value in a few years. Buying a home is a great investment.
6. You have kids, or kids on the way
If you already have children, you most likely want to settle down into a nice neighborhood. Kids don’t like moving away from their school and friends, so buying a home makes the most logical sense. If you don’t have kids this doesn’t mean you’re not ready to buy a home, not at all.
7. You’re tired of renting
Renting is financially exhausting. You are basically paying someone else mortgage payment. You’re hurting your bank account and helping theirs. You might want to spruce your place up but as a renter, what’s the point. If you feel the need/want to upgrade your home, now is the time to buy. You will feel proud and a sense of accomplishment taking care of and improving your home. So, get your DIY skills ready.
If you think a few of these describe where you are at in life, contact a Dominion Lending Centres mortgage broker who can put you on a path to home ownership.