I still remember the phone call from my wife: “Adam! The house my grandfather built is up for sale! We need to buy this house!” I answered with concern: “Are you sure we can buy a house?” I didn’t wake up that morning planning on buying a house, but I went to sleep that night having appointments booked with a mortgage broker and a real estate agent.
The house viewing went great. It was well built, in a good location and ready for our personal touch. The meeting with the mortgage broker, on the other hand, was concerning. We had just paid for our wedding a few months earlier and had no savings. I was working a seasonal entry-level job and my wife had recently become a manager at a not-for-profit organization. Let’s just say we weren’t ideal clients.
Do you think we got approved?
We did!
How, you might ask? Because it was 2007 and the rules were different. Credit was a lot easier to get in the years leading up to 2007, especially mortgages. People, mainly in the United States, were getting mortgages for houses they couldn’t afford and then walking away once the bills got too high. This caused the banks to lose a lot of money on their mortgage loans and triggered the market crash of 2008. Afterward, the Canadian government changed the criteria for qualifying for a mortgage. So even though you might be in better financial shape today than I was in 2007, you may still find it more difficult to get approved for a mortgage.
One of the hardest things about your first home is saving the down payment, which is usually 5% of the sale price. So a $200,000 mortgage would require a $10,000 down payment. Do you have that in your bank account right now? But I have good news. In May 2017, Nova Scotia introduced the Down Payment Assistance Program (DPAP). Yes, there are terms and conditions that apply, but now individuals and families with lower incomes have the option to borrow their down payment and pay it back over time. I’ve helped clients take advantage of this program and will work closely with you to make a plan. Call me or Email me today so we can talk about how to get you into your first home. To learn more click here.