Although the cost of housing rose about $100,000 in a single year, a lot of the mortgage qualifying criteria has evolved.

You may actually find it easier to buy a home.

Jacqui Mulikow of Mortgage Intelligence agrees, “As a mortgage broker, I’m finding it a lot easier to get clients qualified than I was a year or a year and a half ago.”

So what’s different? 

Mortgages are finally adjusting to people’s lifestyles.

Perhaps the biggest news is the extended amortization period – up to 35 years. 

According to Peggy Barnett, Regional Sales Manager of TD Canada Trust, the 30 to 35 year amortization, “extends the life of a mortgage and reduces the payment (for an increase in interest cost), but there are other things you can do.” A home equity line of credit is something to consider if you’re looking for some flexibility. “You can make payments based on a one to five-year mortgage or you can have an interest-only payment. It really evolves as you do. Many use it to re-borrow on a home they already own for the purpose of renovation, etc. You can also purchase with a home equity line of credit, and you can purchase up to 90 per cent of the value.”

There is also the option of the five percent down payment being borrowed or utilized through a lender’s cash back options.

Canada Mortgage and Housing Corporation (CMHC) provides lenders peace of mind should a borrower default on the mortgage payments. CMHC will cover the loss to the mortgage. Homebuyers pay based on risk. The amount of down payment is relative to the risk and the value of the home.

Mary Ann Krahulic, Regional Manager, Business Development, Prairies and Territories for CMHC reports many changes to help people qualify for mortgages.

“We’ve eliminated our application fee. We’ve reduced premiums by up to 30 per cent, based on mortgage amount and loan to value, which gives homeowners the opportunity to enter the housing market when they choose and with a smaller down payment.”

An interest-only product is similar to the line-of-credit product. It might benefit a young professional, for example, who may want to stay cash flush on the onset, who needs the liquidity at the beginning of their career but still has the ability to make higher payments. The mortgage is still amortized over the 25-year period, but the customer makes interest-only payments for a specified period of time – five years or ten years – and then it’s amortized over the balance of time.

“We have more specific criteria in helping lenders with what credit worthiness would look like for new Canadians or people with no credit,” adds Krahulic. “We’ve done some work in the area of mortgage flexibility. Before, we would not allow people to take a variable rate mortgage who have less than ten per cent down. We have offered a true 95 per cent variable rate mortgage.” There are also special discount mortgages for energy efficient homes.

All these changes have made it easier for mortgage brokers like Mulikow. “Just with the extended amortization, for me personally, I’m putting people in houses I normally couldn’t.” 

About a year and a half ago, lenders have also started considering self-employed buyers. While they charge a higher premium, the entrepreneur now has a better opportunity. 

“Most mortgage companies are offering prime minus, whereas they used to offer prime or prime plus,” remarks Kelly Brown of Pro Link Mortgage Inc. “You can get into a home with just five percent down. People going into newly built homes can hold rates up to a year.”

If you don’t have good credit, there are still products available but with a higher interest rate. Even if self-employed, with a good cosigner, you might be able to put less than 25 percent down.
But what do you have to make to qualify for a mortgage? Jacqui Mulikow’s formula is: “An income of $80,000 will get you a mortgage of approximately $300,000 over 25 years and $340,000 over 35 years.”
Kelly Brown adds, “If you have good credit and not many bills, calculate three times your income to see what you would qualify for in a mortgage. Then you know what kind of down payment you would need on a purchase price.”

A lot of banks also have online mortgage calculators.

So if the active Calgary housing market has got you thinking you may never qualify for a mortgage, you just might be surprised at how flexible lending has become.  NL