Generally, banks are looking for strong indicators that you will be able to repay your loan within an agreed-upon amount of time (called an amortization period). Having a stable income, reasonable spending habits and a high credit score would send signals that you are financially reliable. This is something you’ll need to assess yourself for. If you are not sure whether you should apply for a pre-approval, a Vancouver mortgage broker can also give you some tips. Below are some of the topics a mortgage broker will discuss with you: A lender’s incentive to give you a loan You can also think of this from a lender’s point of view. Banks are not handing out mortgages to ‘be nice’ or to give people a helping hand. They are trying to earn interest on your loan. So to them, this is a revenue-earning business. It would not be a wise business decision to lend large amounts of money to someone who already bears significant debt, who doesn’t pay bills on time or who does not have a consistent work history. Your gross debt service (GDS) ratio To that end, lenders will also evaluate your trustworthiness to pay back a specific amount. For example, they will look at something called your gross debt service (GDS) ratio. This is a calculation that assumes the home you buy should not cost more than a percentage of your total income. This includes your monthly mortgage payments, utility bills, property tax, and strata fees. So, shopping for a property that is beyond your means would not be wise. You won’t qualify for any mortgage to buy any home. Your credit score Another important factor in qualifying for a mortgage, is your credit score. In Canada, credit scores are rated between 300 to 900. If your credit score is between 680 to 900, you will likely be considered a prime candidate for mortgage pre-qualification. You can qualify with an ‘A level’ lender. If your credit score is between 600 to 680, you are considered to have an average credit score. You can get a loan from a ‘B level’ lender. If you score below 600, you may still qualify for a mortgage. However, your options will be limited, and you may end up paying more in interest than someone with a higher credit score. Please see more on our website.