overcoming the challenges of income qualifying

presents

OVERCOMING THE CHALLENGES

OF INCOME QUALIFYING

HOW DOES A “MESSY” FINANCIAL PROFILE QUALIFY FOR A

MORTGAGE? – WITH CASE STUDIES…

A little about Geoff Lee…

√ Co founder and Director of the Imani Orphan Care Foundation

● www.imaniorphancare.com

√ Over 22 years of real estate experience and investment

√ Member of…

● Better Business Bureau

● Chamber of Commerce

● Mortgage Brokers Association of British Columbia

● Canadian Association of Accredited Mortgage Professionals

http://www.imaniorphancare.com/

√ Mortgage educator/key note speaker for…

● Wealthy Investment Network

● Business Network International

√ Regularly sourced for mortgage insights by the …

● Vancouver Sun

● Mortgage Broker News

√ Ranked amongst the top 3% mortgage brokers in Canada by CMP magazine

√ Finalist in 2014 CMP Canadian Mortgage Awards for Best Customer Service from

an independent office

√ Recipient of Dominion Lending Centres Silver award for 2012 and 2013

I’M READY TO INVEST!!...,

But the bank says I have to income qualify!

HOW???

WHAT ARE YOU?

Are you employed? Do you work for a company?

• Receive a consistent paycheck and get a T4 in the spring for tax filing purposes?

Or self-employed? Are you one of the following?

• Sole Proprietor – one person performs all functions. You pay personal taxes on net income (business expenses deducted)

• Incorporation – business is a separate entity. You pay personal taxes on wages/salary given to you from the incorporation.

• Limited Company – same as an incorporation.

COUNTING YOUR CHICKENS!!!... In other

words, what documents do you need to

show income qualification?

A. Are you employed? You may need the following:

1. T4’s for the previous year

2. 2 most current Notices of Assessment

3. Most recent paystub

4. Letter of employment

5. Up to 90 days of bank history to show you have the down payment and closing cost (usually 1.5%)




A. Do you work for yourself? PROPRIETORSHIP MAY NEED:

1. T1 Generals for the most recent last 2 years

2. 2 most current Notices of Assessment

• Proof that no personal taxes are owing

3. Up to 90 days of bank history to show you have the down payment and

closing costs (usually 1.5%)




A. Do you work for yourself? CORPORATION MAY NEED:

1. 2 most current Notices of Assessment - You need to show an income!

• Proof that no personal taxes are owing

2. Up to 90 days of bank history to show you have the down payment and closing costs (usually 1.5%)

3. Verification of Business For Self

a) Last 2 years of Business Licenses

b) Articles of Incorporation

c) Last 2 years of GST/HST remittance forms

d) Last 2 years of Financial Statements

e) Business Registration Form

Make sure you are

working with a good

accountant who is

aware of your future

goals and sets your

business up so that

you show at least an

average income on

your NOA.

But what if you don’t

income qualify, even

with using a great

accountant? Is

there another way?

YES!!

You can use “Stated

Income” which simply

means “stating” your

income to be

REASONABLE and to

reflect the time you

have been working

within that industry.

For what type of mortgages can I use

“STATED INCOME”?

• REFINANCE

• PURCHASE

• PRIMARY RESIDENCE

• PURCHASE PLUS IMPROVEMENTS OFF PRIMARY RESIDENCE

• SECOND HOMES

• INVESTMENT PROPERTIES

What do Insurer’s guidelines say about


GENWORTH AND CANADA GUARANTY

• To be a permanent resident of CANADA

• MAXIMUM of 2 units in the property

• BUSINESS FOR SELF (BFS) for more than 2 years (Exceptions may apply)

• Must be the same industry for the last 2 years

• Cannot be COMMISSIONED SALES if HIGH RATIO

• Can be COMMISSIONED SALES if CONVENTIONAL

• Established CANADIAN credit




• GDS and TDS ratios (GDS/TDS)

• Credit score of >680 and GDS/TDS ratios of 39/44

• Credit score of <680 and GDS/TDS ratios of 35/42

• 2 – 2 – 2 RULE

• Up to 2 years with NO late payments

• Minimum of 2 “trade lines” such as a credit card

• Minimum of $2,000 dollar credit limit

• Low utilization of debt




• ABSOLUTELY NO PERSONAL TAXES OWING

• DP needs to be 10% of purchase price… but

• 5% needs to be from own resources

• 5% can be gifted from an immediate family member

Insurer’s premiums

Mortgage Default Insurance is required, generally, when you are contributing between 5%

and 20% of the value of the property as a down payment. Other factors such as investment

properties and Self Employed can affect whether or not you pay insurance premiums.

In Canada, we have 3 companies that provide that insurance; Genworth, CMHC, and

Canada Guaranty.

We pay for this insurance through premiums that are usually added to our mortgage. The

following charts show premiums charged by mortgage insurers.

What premiums do you pay with “STATED

INCOME” (of BFS)?

INSURERS GIVES THE FOLLOWING RATE PREMIUMS FOR BFS:

DOWN PAYMENT LOAN TO VALUE PERCENTAGE OF LOAN AMOUNT

15% - 10% of Purchase Price 85.01% - 90% 5.45%




>35% of Purchase Price Up to 65.00% 0.90%

What premiums do you pay for “INVESTMENT

PROPERTIES”?

INSURERS CHARGES THE FOLLOWING PREMIUMS FOR PROPERTIES BOUGHT FOR INVESTMENT:





What premiums do you pay for “STANDARD

PREMIUMS” (or up to 4 residential properties)?

INSURERS CHARGES THE FOLLOWING PREMIUMS FOR RESIDENTIAL PROPERTIES:








“An investment in knowledge

pays the best interest”Benjamin Franklin

“Lasting Quote….”

Get in touch with us….

www.geoffleemortgage.com

Twitter: @geoffleeca

Linked In: http://ca.linkedin.com/in/geoffleemortgage/

Email: [email protected]

Phone: 1.778.552.3489

http://www.geoffleemortgage.com/

http://ca.linkedin.com/in/geoffleemortgage/

mailto:[email protected]

Thanks so much for attending the GLM Mortgage Group

workshop – OVERCOMING CHALLENGES OF INCOME

QUALIFYING 101.

If you have any questions please call me at 778.552.3489

or email me at [email protected].

“We specialize in getting you the fastest “YES” at the

SHARPEST RATE… GUARANTEED!”

- Geoff Lee

overcoming the challenges of income qualifying

Economy & Finance