9 June 2010
They have 20% or more equity, their total debt service ratios don’t exceed 40-42%.
Let’s see what it means in practice. For example, if you make $60,000 a year and have 20% down you have two variants:
In case of a 3-year fixed qualifying rate of 3.75% you’ll be approved for a $400,000 variable-rate mortgage.
In case of a 5-year posted qualifying rate (today it’s 5.99%) you’ll be approved for only $316,000.
The difference is 21%, and it’s only because you chose a different bank.