Financing Your Condo
With the ever increasing cost of purchasing a single family home, a lower priced condo can be a great alternative.
Qualifying for financing for your condo in Canada is slightly different from qualifying for a single family dwelling. This is because your condo fees are taken into consideration when you are applying for your mortgage.
Lenders will calculate your Gross Debt Service ratio by adding together the cost of your mortgage principal and interest plus your property taxes and your heating costs plus 50% of your condo fees and divide this number by your pre-tax income.
The resulting number needs to be less than 35% in order for you to qualify for a mortgage. They will also look at your Total Debt Service ratio.
This ratio is calculated by adding your Gross Debt Service ratio that was just calculated, plus your car payments, plus alimony and other loans, plus the remaining 50% of your condo fees. Then, they will divide this number by your pre-tax income.
This number needs to be less than 42% in order for you to qualify for a mortgage. Therefore, the amount of your condo fees can plan a large part in whether or not you qualify for a mortgage.
Here is a handy calculator that will let you figure out your own Gross Debt Service ratio.