Mortgage question

[rachelMcK]

I'm from Canada so it may be different in the states but do you have to be debt free to get a mortgage? I always thought so and have been stressing myself out like crazy trying to save and pay down debt to buy a house... but then i started thinking, i doubt every homeowner was debt free when they bought a house?

We desperatly need to move out of our neighborhood and really don't want to rent anymore and we have about 33000 in student debt.

Thanks!

[3-boys-4-me]

No, you don't have to be debt free to purchase a home. When we purchased our current home, our second, we had a car payment. When we purchased our first home, we had one credit card payment and one car payment.
I think it has more to with your credit score and your debt to income ratio. I am sure others here can offer more help. Much luck to you.

[Cricketlegs]

We had to have a debt ration at a certain % and not above so we had to pay off a few things first like the bealls card(chopped up) and the Tv stand(paid off) to get in the ratio.

How much you have and your payment history will effect your interest rate too.

[geckoace]

when we got our mortgage they asked to see credit card and bank statements your housing payment can't normally be more than 40% of you monthly income. there are percentages for the rest as well there are alot of "how much house can you afford" calcs on the internet that take these things into account i found the champion realty site helpful when i was trying to figure stuff out

[monkeywrangler71]

Your housing costs should not be higher than about 30% and your total costs (housing + other debt) should not be more than about 37%. The actual numbers will vary by lender.
Here is a link to RBC's mortgage qualifications:
http://www.rbcroyalbank.com/buyingah...lifmrtge2.html

And a calculator to determine your TDS:
http://www.rbcroyalbank.com/cgi-bin/...ratio/calc.cgi

[Grayce]

I'm from Canada too

You do not need to be debt free to get a mortgage. We bought our first home when we still had student loans and a car payment. Different financial instutions have different policies for how much they will let you borrow. Sometimes they will go up to 45% for first time buyers. This is how you figure out how much monthly payment you can afford. Basically you can have payments (mortgage, student loans, car payments, CC minimum payments) that add up to 45% of your gross income (before taxes). If your gross monthly income was $4000 that would mean all your payments could not be more than $1800. If you student loan was $400 that would mean you could have a mortgage payment of up to $1400.
If you go to a mortgage broker or banker they can look at your finances and tell you how much you can afford. For a 1st time buyer you can put as little as 5% down. Sometimes banks run promotions and you can buy with zero down (Scotiabank does this). If you do zero down you will probably get a bit higher interest rate.
I think buying a house as soon as your can is a great financial decision.

[bee9984]

We had debt when we purchased our homes.

I would make a suggestion though if I may , contact a mortgage broker, if you want you can pm me and I can give you the name and phone number and website of ours, he is really great! Their office is located in Ottawa too It is the mortgage centre.

The reason I am suggesting a mortgage broker is because when we went to buy our first house 11 years ago we called a bunch of banks, we were turned down by the first one or two so then we just called a bunch within a few days to apply as we thought well we should have an answer of a yay or nay sooner than later. Little did we know how badly that effected our credit report! The banks then wanted to know why we had so many banks looking into our credit report, they figured that they must have all declined us for whatever reason as we kept going to banks UGH!

So, we called a mortgage broker, they take your information and check your credit report once, and then give the information to all of the financial institutions (banks etc...) who compete for your business. The financial institutes have no idea what the other is offering so you can pick and choose which one you would like to do your business with.

We just renewed our mortgage for 5 years at 4.99%

[rachelMcK]

Thanks everyone...I've been doing those online calculators at all the banks (not the pre-approvals) and well, they all say the same thing, we can get about 75k for a mortgage, the cheapest houses in this area are about 160k...yuck. We're gonna keep saving. I have another question, but I'm gonna post a new thread for it.

Thanks again.

[StellaS]

No.

You might try some mortgage calculators. They'll give you an idea of what you may qualify for.

Here's one:

http://www.homefair.com/mortgage_and...ndex.asp?&cc=1

[StellaS]

Opps. Should have read the entire thread. Sorry for information you were already familiar with.