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Tony Tran
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Loans from the bank with limited money given

Tony Tran
Posted Dec 26 2022, 14:05

Hi guys, I currently live in Saskatoon, Canada (I cant find my city so I have to use Edmonton, but still in Canada. I've got a question about loans from the bank.

By going thru many podcasts and books of real estates, most of the tips are saving money to have enough and we leverage it to get a house we want but when I get to the bank to ask for a pre-approved loan, they told me that there is a limit to any loans given, and the maximum they can loan me is 200k base on my income statements, I have a job and have no bad credits. 

The question is most of the examples from the books and podcasters are seem to be unlimited loans, so is there a way that we can get there to get an unlimited loan??

for example: I have saved up 60k this year, I found a house worth 300k, my available cash is 20% of the house value but because of the limit of the loan from the bank, I can just get a 260k house, is there a way a can widen my limit or get that house but not having to save up to 100k cuz the opportunity will be gone by the time I have had enough money.

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Replied Dec 26 2022, 15:34

Hey Tony! Dayne here also from Saskatoon. I don't believe there are many traditional banks that would increase their limit outside of increasing your t4 statement. 

if you're looking for a multifamily property - banks can use approximate market rents to help increase your income and thus increase your purchase limit by a bit. 

Or potentially fine a partner who would be willing to qualify for the loan for you- depending if that's something you'd consider.

On bigger pockets, most people often referred to using assets to qualify for loans ( almost like limitless qualification ). However this works for commercial lending and is often to large value adds to help make it beneficial without having to front around 25% down. I have more experience with residential and none in commerical lending but this id what ive learned so far !

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Ronald Quaroni
  • Real Estate Broker
  • Saskatoon
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Ronald Quaroni
  • Real Estate Broker
  • Saskatoon
Replied Dec 26 2022, 22:40

Hey Tony,

If you are using traditional lenders to fund the deal you are going to have to play within their rules, but there is likely a solution for you. You just have to find a bank, monoline lender or alternative lender that has a better rental calculator. Are you working with a mortgage broker or just your day-to-day bank? Different lenders use different rental calculations so it may be possible to get to your desired amount with another lender through a mortgage broker ( I work in Saskatoon as a mortgage broker). Feel free to shoot me a message here or give me a call (306) 290-4438.

Best of luck!
 

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Zorya Belanger
  • Rental Property Investor
  • Edmonton, Alberta
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Zorya Belanger
  • Rental Property Investor
  • Edmonton, Alberta
Replied Jan 19 2023, 09:27

There are a few options for increasing your loan limit and allowing you to purchase a more expensive property. One option would be to look for alternative lending sources such as private money lenders or hard money lenders, who may be willing to lend you more money than a traditional bank.

Another option would be to consider applying for a joint loan with a co-borrower, such as a spouse or family member, which can increase the amount of money you are eligible to borrow.

You could also consider applying for government-insured loans, such as the CMHC loan, which may have more flexible lending guidelines and allow you to borrow more money. You can put as little as 5% down, but it needs to be your primary residence. 

As stated above, commercial loans (for buildings with 5+ units) are where you will find fewer limits around your personal income, as the lenders use the building's income to qualify. not yours. However, you still have to personally guarantee the loan so they look at your net worth. The nice part is that if you do it right, your net worth should grow as you acquire more buildings, making it easier to qualify for the next loan. This is what I love about multifamily!

It's also important to note that your credit score, income, and debt-to-income ratio also play a role in determining the amount of money you can borrow. Improving these factors can help you qualify for a higher loan limit.

However, it's important to keep in mind that taking on a higher loan limit also means a higher monthly mortgage payment, and you should be sure you are able to make the payments before taking on more debt. It's also important to carefully consider the long-term financial implications of taking on a larger loan.

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Andrew Postell#1 Creative Real Estate Financing Contributor
  • Lender
  • Fort Worth, TX
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Andrew Postell#1 Creative Real Estate Financing Contributor
  • Lender
  • Fort Worth, TX
Replied Jan 20 2023, 08:48

@Tony Tran @Dayne Peterson @Ronald Quaroni @Zorya Belanger Wow!  What terrific help here.  BP used to have a "Canadian" forum and things like this were discussed all the time but VERY happy to see so many people from Canada post and help here.  Thanks everyone!

Lender Texas (#392627)