Canadian Mortgage Calculators - Quick Mortgage Qualifier

Quick Mortgage Qualifier

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Part of the conventional mortgage qualification process is based on three ratios. The Gross Debt Service ratio ( GDS ) (the borrower must not commit more than 32% of total gross household income towards the payment of Principal + interest + property taxes + heating + 50% of condominium fees), the Total Debt Service ratio ( TDS ) (the borrower must not commit more than 40% of total gross household income towards the payment of Principal + interest + property taxes + heating + 50% of condominium fees + payments on all other revolving credit debt i.e. credit card payments, auto loan/lease etc.) and the Loan To Value ratio ( LTV ) (the Principal or Mortgage Amount divided by the lesser of the Purchase Price or Appraised Value). This cannot exceed 95%.

Determine the values for the variables described in the ratios above, your mortgage amount, the length of mortgage contract that you want with your lender (TERM) and how long you think it will take to pay off your mortgage amount (AMORTIZATION). Your Realtor or mortgage broker will provide you with the current interest rates (STATED ANNUAL RATES) which are based on the TERM that you select.

EXAMPLE:
Amortization is 25 years, Term is 5 years and interest rate (Stated Annual Rate) is 4.34%. If your total combined gross annual income is $100,000.00 then to qualify for a conventional mortgage your TDS cannot exceed $ 40,000.00 (Maximum TDS is 40%). If your Total Monthly Debt Payment (revolving credit debt) is $ 1,200.00 ($14,400.00 per year) then your allowable amount for GDS is $ 40,000.00 - $14,400.00 or $ 25,600.00. Subtract the estimated annual property taxes ($ 3,000.00), heat ($ 1,800.00), and 50% condo fees (N/A) from the $25,600.00 and divide the result by 12 (months) and you will have the amount allowable for the Principal and Interest mortgage payment.

Answer: $ 1,733.33.

This calculator, based on the information that you provide, will determine whether or not you quantitatively qualify for the mortgage amount that you have specified. In addition, it will provide you with the Total Loan Amount (the Principal/Mortgage Amount plus the CMHC/GE Capital Mortgage Insurance Premium), the P.S.T. payable on the mortgage insurance premium, the Land Transfer Tax, your three ratios, the Total Loan Amount payment and the Maximum Total Loan Amount that you would qualify for based on your submitted information.

Should your calculations indicate that the Applicant “ Will Not Qualify “ review the Applicant’s ratios. Remember, for conventional financing the GDS cannot exceed 32%, the TDS cannot exceed 40% and the LTV cannot exceed 95%

“ Will Not Qualify “ indicates the following. The Applicants’ Total Gross Annual Income is insufficient to support both the applied for Total Loan Amount and the Applicants’ current Total Monthly Debt Payments (revolving credit debt).