# what are my chances and where do I go?



## Sashok (Jan 8, 2017)

Hi! 

I am trying to figure out if I can get a mortgage for a town-house/condo with a listed price of 200K. My wife and I are full-time students, we also work part-time, but for less than 2 years for our current employers. We make around 32K together (employment income). I have a credit score of 766. We have accumulated OSAP debts of 22K each. What is the likelihood of our getting a mortgage and which route shall we go? We went to a bank and they said to wait till we have 2-year experience with our employers. 

Thank you!


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## redsgomarching (Mar 6, 2016)

Based on income level and propensity to pay. 
What is your down payment? What other debts to you have? already I can tell you with 32k income and 44k student loan debt will definitely not work in your favour.


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## Sashok (Jan 8, 2017)

redsgomarching said:


> Based on income level and propensity to pay.
> What is your down payment? What other debts to you have? already I can tell you with 32k income and 44k student loan debt will definitely not work in your favour.


No other debts. I have 10K cash for down payment. I also have 30K credit line not being used currently. Not sure though if I can use it for DP.


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## STech (Jun 7, 2016)

I don't want to sound rude, but 2 full time students living on OSAP, and you want to be home owners right now?


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## Just a Guy (Mar 27, 2012)

The rules for qualifying change all the time. What was true yesterday can change today. Best bet is to ask a mortgage broker, they can shop you around to a much larger pool of sources. 

As someone who has been getting mortgages for years, I can tell you that even if someone says "no", that doesn't mean much. There are at least 5 different divisions in the same bank that can issue mortgages, all with different underwriting requirements. That means I've been rejected by the same bank at least 4 different times on the exact same deal, in the same time period, before I got the mortgage at that same bank. 

There are the in branch mortgage specialists, their independent mortgage specialists (these even have people with different abilities I've found, if one can't get it another may), there are then specialist divisions with different qualifiers such as small business, agriculture, high net worth banking, etc. 

That's just at one bank...a mortgage broker may have access to even more at that same bank. Then you have 5 big banks, online banks, specialist mortgage lenders, secondary lenders...

If you really want a mortgage, you can probably get one...just be VERY careful of the terms. Some of these lenders can be loan sharks too.


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## Eder (Feb 16, 2011)

You can't afford it.


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## redsgomarching (Mar 6, 2016)

Sashok said:


> No other debts. I have 10K cash for down payment. I also have 30K credit line not being used currently. Not sure though if I can use it for DP.


I used to work at the bank and know the mortgage rules - this won't help you. 
Your debt-servicing is insanely high. 
Income before taxes for 2 people is 32k, monthly that turns into = approx 2700 per month. 
Not sure how much your student loan payments are but they will be included in your servicing ratio.
Your mortgage payment is approx 1k based on what you provided. And this is assuming you have no other debts like you stated (rarely this is the case in my experience). 

Why don't you rent for a while and save? This is beyond a bad idea.


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## Sashok (Jan 8, 2017)

Eder said:


> You can't afford it.


my logic regarding if I can afford it or not based on the fact that I've been paying a rent of 1.3K for a quite some time already... I chose the property which would entail similar monthly payments. 

Regarding OSAP debts: since we are still in school, Government is not asking to pay off the debt, but even when we are out of school, the payment will be calculated taking into account our then income, so, there is, social-assistance coefficient (let's call it that) in the repayment formula. Would lender take this fact into account? Also, would they be interested the course we are enrolled in, say, if we are both in medical school, would that make any difference? 

Thanks again for all the responses!


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## redsgomarching (Mar 6, 2016)

Sashok said:


> my logic regarding if I can afford it or not based on the fact that I've been paying a rent of 1.3K for a quite some time already... I chose the property which would entail similar monthly payments.
> 
> Regarding OSAP debts: since we are still in school, Government is not asking to pay off the debt, but even when we are out of school, the payment will be calculated taking into account our then income, so, there is, social-assistance coefficient (let's call it that) in the repayment formula. Would lender take this fact into account? Also, would they be interested the course we are enrolled in, say, if we are both in medical school, would that make any difference?
> 
> Thanks again for all the responses!


You need to consider the costs of home ownership as well. 
Insurance, condo fees, utlities, taxes are all expenses that add together on top of your mortgage payment. Lets also factor in the fact that you will have closing costs, register cost, appraisal because you are only putting 10k down, furthermore you will have CMHC which will add more to your payment. 

May I ask why you even want to do this? If you are in medical school you will obviously have to complete a residency somewhere and that could be anywhere. Why tie yourself down to a place and go through this hassle if you might have to leave?


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## Eder (Feb 16, 2011)

Let me know which bank you get a mortgage from if you buy the condo...I will need to modify my portfolio.

Try this quiz.

http://www.getsmarteraboutmoney.ca/...ator/buy-or-rent-calculator.aspx#.VuIRcNCCS00


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## Sashok (Jan 8, 2017)

Eder said:


> Let me know which bank you get a mortgage from if you buy the condo...I will need to modify my portfolio.
> 
> Try this quiz.
> 
> ...


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## Mukhang pera (Feb 26, 2016)

I’ll go completely contrarian here and suggest that you go for it, if owning a home holds appeal for both of you.

My wife and I were students when we purchased our first house in Vancouver - a triplex in Kitsilano. Can’t call it an “investment”, since any amount of reading here on CMF will tell you that only mad dogs and Englishmen are foolish enough to buy duplexes or triplexes. But at age 22, what did we know? There was no CMF then to save us from ourselves.

We had both completed undergraduate degrees in Ontario and were attending UBC. We had unpaid Ontario student loans to use as a down payment, plus some savings. In those days in Ontario, university students could receive from the government a certain amount each year, with 2 components - a “grant” portion and a “loan” portion. The loan portion we would put in a savings account at about 9% and we would spend part of the grants.

We looked at single-family houses in Richmond in the $50,000 range. Richmond was much more rural then. We looked at Burnaby. Also cheap, but a long haul to UBC and away from downtown, where we anticipated working eventually. East Van was also cheap, but just did not feel right. Kerrisdale, Dunbar, South Granville, Mackenzie Heights were loaded with really nice sf homes, on decent-size lots, but mostly in the $100,000 range and with no income potential, so moving there would have to wait a few years. Kitsilano looked like the best bet. We found a nice triplex for $74,500. We could stretch to pay $18,000 down. 

With us still in school, in debt and with no credit history at all, I did not even consider approaching a conventional lender for mortgage funds. I don’t like being laughed at. So we asked the vendor - an older woman who was moving into an apartment - if she would carry some paper. Agreed. The result was a 5-year agreement for sale. We paid $70,000 for the house and paid $18,000 down, with a 5-year a/s, $52,000 at 11%, with monthly payments of $500.53 (I still remember exactly). We lived on the main floor and rented the upper and lower suites, which covered the mortgage.

My Toronto parents thought we were nuts (that’s an awful lot of money to pay for a house! they cried). My wife was a bit nervous, but I asked her what was the worst that could happen? We find we can’t make the payments and the a/s goes into foreclosure. I know, one does not apply for_ foreclosure_ of an agreement for sale, one applies for _cancellation_. I reckoned, in that unlikely event, that during the redemption period we could apply for an order for sale, with conduct of the sale, and probably salvage all or most of our down payment. Even if all were lost, not the end of the world. Youth was on our side. We’d recover.

As an aside, I just now checked with BC Assessment online. The current assessment for that Kits triplex is $2,377,500, with $45,500 of that assigned to the house (built in 1912) and the balance to the stately 33 x 110-foot lot. I won’t even bother to ask JAG and some of the other seasoned veterans of the real estate trenches hereabouts just how THAT looks as an “investment”! What’s the rule of thumb? One percent of the gross purchase price per month? I’m sure the old place brings in $23,000 a month or so.

Also Sashok, take a look around here on CMF. Recently there was a thread about buying a house while young, and how destructive it can be of one’s future. So be cautious. But for the young and foolhardy, a vendor-financed duplex or triplex can be a good entry to the market and will ensure that you spend the rest of your years living in houses you own and which you feel good about owning. At least provided you never get so fiscally enlightened that you realize you have nothing to feel good about. Happily, I am not there yet.


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## redsgomarching (Mar 6, 2016)

so hard to help such arrogant people. i wish you luck in your future progressions and please come back here to cry after you realized it was a bad idea.


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## Just a Guy (Mar 27, 2012)

I'd point out that mukhang bought at a different time in the real estate market. Interest rates were higher, prices lower. Interest rates have been on a continuous downward trend for upwards of 20 years, which brought in the largest real estate boom in history. 

I think people buying today will have a completely different market. I think the prices and interest rates are going to swing back after having gone a long way to making people a lot of profits. 

I doubt anyone would expect the same returns mukhang had to continue going forward forever...


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## Sashok (Jan 8, 2017)

redsgomarching said:


> so hard to help such arrogant people..


you wanna make it personal? why don't you pm me and I could leave my phone number for us to meet?


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## OnlyMyOpinion (Sep 1, 2013)

Sashok said:


> you wanna make it personal? why don't you pm me and I could leave my phone number for us to meet?


I'll suggest that folks posting on CMF accept that they have asked for and will get a range of opinions and responses, including - unfortunately and usually unwarranted - personal judgements. Best to ignore rather than escalate and waste energy.


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## redsgomarching (Mar 6, 2016)

I meant nothing personal just an observation on your arrogance to ignore people trying to help you and understand your situation. You wanting it to be personal shows how arrogant you truly are and I do not envy the people who come to you for future medical advice if thats how hot headed you get. How can you expect to deal with patients with an attitude like that?

Anyways, I tried to provide some input but I guess a medical student would rather come here and try to sound pretentious when in reality they are nothing special.

Good luck.


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## Sashok (Jan 8, 2017)

redsgomarching said:


> I meant nothing personal just an observation on your arrogance to ignore people trying to help you and understand your situation. You wanting it to be personal shows how arrogant you truly are and I do not envy the people who come to you for future medical advice if thats how hot headed you get. How can you expect to deal with patients with an attitude like that?
> 
> Anyways, I tried to provide some input but I guess a medical student would rather come here and try to sound pretentious when in reality they are nothing special.
> 
> Good luck.


What is your problem?! All I have done so far was just some input data for people could give some advise. I have received some advice and expressed my appreciation. If it was not clear enough before, I thank all and you, in particular for all the advice expressed here. Where above have I said anything, other than that I applicated the time and effort people, and you personally, took too make it clearer for me? Again, if you want to make it personal, I will give that satisfaction to you. Let's just not spam here. Let's meet, and you can tell me everything you think about me (no matter how ridiculous that sounds) to my face.


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## Nelley (Aug 14, 2016)

Just a Guy said:


> I'd point out that mukhang bought at a different time in the real estate market. Interest rates were higher, prices lower. Interest rates have been on a continuous downward trend for upwards of 20 years, which brought in the largest real estate boom in history.
> 
> I think people buying today will have a completely different market. I think the prices and interest rates are going to swing back after having gone a long way to making people a lot of profits.
> 
> I doubt anyone would expect the same returns mukhang had to continue going forward forever...


Why would you say that? The triplex only has to appreciate to 2377500/70000*2377500 = 80.75 Million.


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## Just a Guy (Mar 27, 2012)

I have been called a pessimist...one of the more flattering things I've been called now that I think about it.


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## Karen (Jul 24, 2010)

redsgomarching said:


> I meant nothing personal just an observation on your arrogance to ignore people trying to help you and understand your situation. You wanting it to be personal shows how arrogant you truly are and I do not envy the people who come to you for future medical advice if thats how hot headed you get. How can you expect to deal with patients with an attitude like that?
> 
> Anyways, I tried to provide some input but I guess a medical student would rather come here and try to sound pretentious when in reality they are nothing special.
> 
> Good luck.


I didn't see anything arrogant about Sashok's posts, redsgomarching. But I did think your post to him was quite rude and uncalled for.


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## sags (May 15, 2010)

Not that I recommend it as a wise thing to do......but,

According to the mortgage calculator at Realtor.ca, with a $32,000 income you would qualify for a $190,000 mortgage if the taxes are $250 a month, heating costs $150 a month, there are no condo fees, based on a 3% interest rate, and you have no debt payments.

If the home is a condo with fees, or if you have any debt payments, or taxes, heating or interest costs are higher than the above listed amounts, the mortgage qualified for would be considerably less.

The CMHC fee is added to the mortgage as well, and may put the price above an eligible mortgage.

If you could negotiate the sale price of the home lower, it would be helpful to what you want to do.

If you do apply at a number of financial institutions, you should do them all at once. If the credit inquiries are at the same time they are grouped together and considered as "one hit" to your credit. 

If they are spread out over time, they would each be a credit inquiry and a high number of them would lower your credit score.


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## redsgomarching (Mar 6, 2016)

Karen said:


> I didn't see anything arrogant about Sashok's posts, redsgomarching. But I did think your post to him was quite rude and uncalled for.


hmm i reread this and yeah i realize i was exactly that. OP i apologize - i would definitely consider some points in the thread before you make your decision. gl!


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## Karen (Jul 24, 2010)

It was good of you to apologize - thank you!


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## OnlyMyOpinion (Sep 1, 2013)

Karen said:


> It was good of you to apologize - thank you!


:encouragement:


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## Mortgage u/w (Feb 6, 2014)

So here is your personalized loan consultation.....I manage a mortgage underwriting center for a large lender so this is as accurate as it can get.

Income: You need at least 2 years of income stability since your employment is part-time. Seeing as your bank already identified that, they would be correct. But lets go through the numbers you provided anyways assuming you do have the 2 years. Qualifying income on $32000 gross per year is $2667/mth.

Down-Payment: Although you did not specify, we will assume the minimum required which is 5%. Financing a mortgage at 95% of the $200k purchase price is $190,000 which you will need to add mortgage insurance of 3.60% so total loan is $196,840. Regardless the interest rate, you will need to qualify with a benchmark rate of 4.64%. Qualifying payment would be $1105/mth. Actual payment would be about $915 but for qualification purposes, we need to use $1105.

Debts: Add up all your loans (student loan, credit card balances, car loans, retail cards, etc). I stress this because many people forget or convince themselves they have less debt. Assuming $44,000 is the ONLY debt you have, the qualifying payment for this is 1%, so $440/mth. If the loans are already converted to revolving credit with a set interest rate, you will need to qualify with a 3% payment. But lets assume 1%. (All other credit card debt is 3%)

Utilities: You will need to consider the actual amount for property taxes. If its a new construction, you consider 1%. So lets consider $2000 ($167/mth) and heating is also factored in at a minimum of $100/mth. If condo fees apply, then you need to consider them. If unknown, we'll use $100/mth.

Your GDS (Gross Debt Service) level must not exceed 39% and your TDS (Total Debt Service) level not exceed 44%.

Qualifying Income: $2667
GDS debt amount: $1472 ($1105+$167+$100+$100)
TDS debt amount: $1912 ($1105+$167+$100+$100+$440)

GDS = 55% ($1472 / $2667)
TDS = 71% ($1912 / $2667)

It is clear you do not qualify - by far. What the GDS tells us is that even if you had zero debts, you would not qualify for this loan. Your incomes are too low and lack stability. At these ratios, I can tell you that even a higher down-payment would not help since the payment does not go that much lower and would not reduce your ratios enough. 

Not sure how you are affording your current rent of $1300 but you must be either living a very frugal life or you are regularly dipping into your student loans to compensate. 

My advise to you is to finish school, get full time jobs, pay off your debts and put as much money aside as possible in order to accumulate at least 20% down payment. Carrying such large student loans along with a mortgage is a recipe for financial disaster. I see it way too often and 99% of such profiles never recover to financial freedom. Everyone is too eager to get a home that they do so at any cost. Not a wise decision if you ask me.

Hope this clarifies your question.


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## Sashok (Jan 8, 2017)

Mortgage u/w, 

wow! Thank you so much! This gave me a good idea where we stand and where is that qualifying threshold!


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## Sashok (Jan 8, 2017)

redsgomarching said:


> hmm i reread this and yeah i realize i was exactly that. OP i apologize - i would definitely consider some points in the thread before you make your decision. gl!


It's all good! *shakes the hand*


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## Eder (Feb 16, 2011)

I think a tuition rebate is in order.


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## welsh-investor (Jan 5, 2017)

All I can recommend is that you stay away from condos. The monthly fees are one thing, but if big maintenance is needed - like refinishing the parking lot - you may be required to help shoulder those costs too. This happened to a friend of mine in British Columbia. The added costs were nearly unmanageable for her.


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## sags (May 15, 2010)

Mortgage u/w's post is so informative it should be a sticky on the forum.


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