First investment property question

[Joseph Shin]

Hey BP. I'm currently saving for a down payment on my first investment property.

Currently I am seeking a duplex/triplex in the Port Hope/Northumberland area. There seems to only be older properties within my price range. Is it difficult to landlord a property more than 100km away?

Also, what do traditional mortgage lenders look for when determining a pre-approval especially for a first-time home buyer.

[Roy N.]

@Joseph Shin

A conventional lender, say one of the Big-5, is going to look at your income (amount and stability); your debt-to-Income (DTI) ratio; your gross-debt-service ratio (GDS) and, here in Canada, they may well look at the debt service level/ratios for the household.

You will also need to qualify for financing as if you were placing a 5-year term, fixed-rate mortgage,  25-year amortization at the Bank-of-Canada posted rate (~4.6% currently), regardless of the financing product you ultimately use.

As a first time home-buyer you would be eligible for a high-ratio, insured mortgage (>80% LTV) with a downpayment as low as 5% (SFH, duplex) or 10% (triplex, quadruplex). See the CMHC website for details and qualification criteria.