If you are planning of constructing a multifamily apartment you can get a multifamily mortgage. You should note that the Canada mortgage and housing corporation (CMHC) and the lenders usually don’t review your total debt service (TDS) and gross debt service (GDS) ratios to determine whether you qualify for the financing-they focus on your overall net worth.
The lenders usually focus on the value of your liquid assets such as stocks, bonds, and equity in other real estates. Classic cars, antique dish collections, art, jewelry, and other valuable items aren’t considered as part of the overall net worth.
How to qualify for the multi-family mortgage
For you to quality for the loan the CMHC requires that you have a net worth of at least 25% of the loan amount that you are seeking. You should note that the 25% doesn’t include the down payment that you pay for the property. For you to qualify for any loan, you should have a net worth of $100,000.
What you need when applying for the loan
When making an application you should provide evidence of the assets that you have. This calls for you to provide investment account statement, bank statements, real estate tax assessments for other properties, and notice of assessments for individual tax returns.
You should also provide a document that shows that the guarantors have been approved by the credit bureau. For the guarantor to be eligible, he/she must have a credit score of 680 or more.
The most unique thing is that unlike other lenders who advise you to leave your full time job and concentrate in your investment, the CMHC and mortgage lenders want to see that you have income from full time employment.
This gives them comfort that you have steady income even if there is an economic downturn; therefore, you will still continue to pay the mortgage even if you don’t have tenants in your property.
This is what you need to know about multi-family apartment building mortgage financing. While the qualifying process might seem daunting, it’s very easy when you team up with the right lender.
For ideal results you should explain your future plans for the property and the lender will evaluate the transaction and guide you on how to realize your dreams.
Remember that there is great value in teaming up with the right lender who is well acquainted with the approval process and an expert in multi-family financing.