Can You Obtain A Regina Mortgage With Bad Credit?

Mortgage Brokers in Regina are faced with the disappointing task of telling someone they will not qualify for a mortgage. In most cases, to obtain a Regina Mortgage you must have a credit score of more than 620. There can be circumstantial exceptions and there is alot more to a mortgage approval than just a credit score. 


There are 4 main pillars when qualifying for a Regina Mortgage. Think of them as the legs of a table and that all legs must be even for the table to stand properly:

  • Down payment
  • Ability to repay the loan
  • Credit
  • Documentation

 

Down Payment

You can’t buy a home without a down payment, so saving’s should be your main priority.

5% down on the purchase price is the minimum for a Regina mortgage. The rule behind the down payment is that the accumulated savings need to have sat in your account for 90 days (no illegal money). The same rule applies to Tax-Free Savings accounts or RRSP’s. 

If you are being gifted a down payment you can skip this 90 day period. The bank or lender will ask for current bank statements reflecting/proving the amount in your bank account and they will ask for a letter from the person who is gifting you the down payment. The ‘gifter’ must be a blood relative i.e. parent, sibling, aunt, uncle, grandparent. It's required that the downpayment is not to be paid back. 

 

Ability to Repay the Loan

Your employment must be in permanent, full-time status. If you are self-employed, you must have recent Notice of Assessment or T4 stating you owe $0 taxes. No more than 42% of your gross income can go towards paying off your monthly debt obligations. 

 

Credit

In a perfect world, someone would have two ‘trade lines’ of credit with a minimum credit score of 620. ‘Trade lines’ meaning a credit card with a minimum of $2500, a cell phone, a line of credit or a car loan. You don’t need large loans. Banks appreciate credit cards or lines of credit with loans of $2500 or more.

Banks appreciate that the balances of credit sources have been kept below 70%, with the exception of car payments or cell phone bills. Just pay the bills on time! If you have a $2500 credit card, try to keep the balance below $1,250 and if you spend the $2500 all at once, pay it down to $1,450.00.

If you have no credit and you are planning on buying a house in the future, talk to a local mortgage specialist or financial consultant about the best way to safely build credit in a way that works for you.

 

Documentation

You will need to provide:

  • A current letter of employment
  • 90-day bank statements to prove your down payment is in the account or is accumulating
  • 2+ most recent pay stubs
  • Most recent year Notice of Assessment
  • Most recent T4
  • Any other mortgage statements if you own other property

Some of these documents can be provided after the initial ‘pre-approval’. However, if you haven’t filed your taxes for 2 years OR you make 90% of your income in cash jobs then you cannot provide proof of your income and you will not be able to obtain a mortgage even after pre-approval. *Current/updated documents will be required at the time when you submit your Offer to Purchase*

If you have been denied for a Regina Mortgage and you have only missed ONE credit card payment, if the bank made a mistake that impacted your credit score, if you have funky employment but stable income then I encourage you to reach out to more than one bank/mortgage specialist if one turns you down.

If you cannot meet most of the above-listed criteria then you probably won’t qualify no matter what institution apply with but depending on your circumstances, someone may be able to help. 

Try one of the five big banks (TD, RBC, BMO, SCOTIA, CIBC), a mortgage broker and a Credit Union. If all three of those turn you down then you probably don’t qualify, but you never know unless you try.

 

Why Would You Try A Different Institution If One Turns You Down?

I encourage buyers to look elsewhere because each lending institution offers a different product. Banks have their own product. Mortgage brokers and Credit Unions also offer their own products. Each institution has their own set of rules and requirements and each has the ability to make different exceptions.

To Answer Your Question: Yes, you may be able to obtain a mortgage even if you have poor credit but you have to explore the options. 

 

Contact Me

Regina mortgages can be super confusing so connecting with a mortgage professional is the best thing to do. I can provide additional information if you have any questions or if you have been pre approved and would like to go house hunting give me a call at 306-552-7047 or fill out my online contact form

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