{"id":11088,"date":"2017-03-28T01:00:04","date_gmt":"2017-03-28T05:00:04","guid":{"rendered":"http:\/\/www.zoocasa.com\/blog\/?p=11088"},"modified":"2023-06-14T10:16:58","modified_gmt":"2023-06-14T14:16:58","slug":"4-reasons-you-may-be-denied-your-mortgage","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/4-reasons-you-may-be-denied-your-mortgage\/","title":{"rendered":"4 Reasons You May Be Denied Your Mortgage"},"content":{"rendered":"

Planning to buy a home and apply for a mortgage? A vital first step is to get a pre-approval<\/a> from a lender \u2013 a preliminary theoretical approval based on your finances, credit, and employment situation. Getting pre-approved can help establish a firm home buying budget, and provide peace of mind that you can qualify according to a lender\u2019s underwriting guidelines.<\/p>\n

However, being pre-approved isn\u2019t a guarantee that you\u2019ll be granted a mortgage; there are a number of factors that can cause your bank to change its mind on financing your home purchase. Those paying less than 20% down should especially take care during this stage, as they\u2019ll have to pass scrutiny from Canada\u2019s mortgage insurers <\/a>(CMHC, Genworth, and Canada Guaranty) in addition to their bank \u2013 and insurers have some of the toughest criteria of all.<\/p>\n

Related Read: How Will the BoC\u2019s Second Rate Hike of the Year Impact the Spring\/Summer Real Estate Market?<\/a>
\n<\/strong><\/p>\n

The best way to avoid mortgage disappointment is to be proactive and take steps to ensure certain issues don\u2019t arise during your application process. Here are the most common reasons a mortgage deal may fall through.<\/p>\n

You Have Unstable Employment<\/h2>\n

If possible, never time starting a new gig with buying a home. If you\u2019ve recently started a position with a new employer and are still within an employee probation period, that\u2019s a red flag for your lender \u2013 the chance you may not be employed by the end of your probation poses risk to your ability to make your monthly mortgage payments.<\/p>\n

Those who work on a contract basis, earn commission, or are self-employed also face greater scrutiny. You\u2019ll need to provide proof of steady income for at least the last two years. If you can\u2019t, it\u2019s likely the lender will require you to co-sign with someone with strong credit in order to grant you your mortgage.<\/p>\n

You Don\u2019t Have Clear Down Payment Sources<\/h2>\n

To a mortgage lender, it isn\u2019t enough that you have the cash to cover your down payment and closing costs (land transfer tax, lawyer fees, etc.) \u2013 you have to prove where your funds came from, and that they\u2019re not from questionable source. That means producing at least 90 day\u2019s-worth of proof of deposits prior to your closing data.<\/p>\n

You must always indicate whether you\u2019ve received any gifted money, and whether it came from anyone outside your immediate family. If that\u2019s the case, or if you\u2019ve pulled cash from an unsecured line of credit or credit card, you can count on your mortgage application to be declined at once.<\/p>\n

It\u2019s especially important to ensure these financial details are confirmed before entering a live Offer to Purchase deal \u2013 it\u2019ll save a lot of unwanted emotion and wasted time for everyone involved.<\/p>\n

You Have a Shady Credit Past<\/h2>\n

If you\u2019ve encountered any past or current credit issues, or are involved in a consumer proposal or bankruptcy of any kind, that can jeopardize your mortgage application. Making late payments, paying child support, having unpaid student loans and even high monthly car payments can pose issues for your mortgage broker.<\/p>\n

Resolving these issues may be a simple fix, such as paying off a debt, or resolving an outstanding item on your credit report. In some cases, paying a larger down payment may be necessary to offset a credit issue.<\/p>\n

Related Read: How to Secure a Good Credit Score for Your Mortgage Application<\/a>
\n<\/strong><\/p>\n

The Property is Less Than Perfect<\/h2>\n

Sometimes, the problem lies with the home you\u2019re trying to purchase \u2013 if there is something less desirable about the property, or it\u2019s overvalued, your lender may refuse to finance your purchase.<\/p>\n

For example, if you\u2019re looking to buy a condo unit, and the condo corporation\u2019s status certificate indicates past or forecasted financial trouble, your lender may take issue. The same goes for properties that sell far above their reasonable valuations (a common occurrence in today\u2019s Toronto real estate market<\/a>) \u2013 just because you were willing to blow your budget in a bidding war doesn\u2019t mean your bank will be.<\/p>\n

Other factors include buying properties with more than four separate units, non-owner occupied purchases with less than a 20% down payment, homes priced over $1 million, and stigmatized homes, such as former marijuana grow-op houses. These property types are not covered by high-ratio mortgage insurers, and you\u2019ll need more than a 20% down payment to qualify for a mortgage for them. Even in that case, there still may be instances where lenders may not feel comfortable, and will turn down your application.<\/p>\n

Keep in Mind When Applying For Your Mortgage<\/h2>\n

Every mortgage borrower, and property, is different. Rules, rates and regulations may differ between lenders, and making a 20% – or even 50% – down payment doesn\u2019t guarantee you\u2019ll be approved. Be sure to talk to your mortgage broker during the process, who can determine the best mortgage product for your specific needs, and help you with the qualifying process.<\/p>\n","protected":false},"excerpt":{"rendered":"

Planning to buy a home and apply for a mortgage? A vital first step is to get a pre-approval from a lender \u2013 a preliminary theoretical approval based on your finances, credit, and employment situation. Getting pre-approved can help establish a firm home buying budget, and provide peace of mind that you can qualify according […]<\/p>\n","protected":false},"author":44,"featured_media":11090,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","video":"","gallery":"","source_name":"","source_url":"","via_name":"","via_url":"","override_template":"0","override":[{"template":"1","single_blog_custom":"","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"top","share_float_style":"share-monocrhome","show_share_counter":"0","show_view_counter":"0","show_featured":"1","show_post_meta":"1","show_post_author":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"1","post_reading_time_wpm":"300","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"0","show_prev_next_post":"1","show_popup_post":"0","number_popup_post":"1","show_author_box":"1","show_post_related":"1","show_inline_post_related":"0"}],"override_image_size":"0","image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post":"0","trending_post_position":"meta","trending_post_label":"Trending","sponsored_post":"0","sponsored_post_label":"Sponsored by","sponsored_post_name":"","sponsored_post_url":"","sponsored_post_logo_enable":"0","sponsored_post_logo":"","sponsored_post_desc":"","disable_ad":"0"},"jnews_primary_category":{"id":"","hide":""},"footnotes":""},"categories":[3,468],"tags":[],"class_list":["post-11088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ask-the-pros","category-mortgages-2"],"yoast_head":"\n4 Reasons You May Be Denied Your Mortgage | Zoocasa Life<\/title>\n<meta name=\"description\" content=\"Being denied your mortgage when trying to make a home purchase can be extremely stressful - 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