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When applying for a mortgage you should provide prospective lenders with enough information about your work history, debts and assets. The will look at your personal financial situation and determine a Gross Debt Service ratio (GDS), based on your potential mortgage payments and property tax expenses. This ratio is usually limited to 30-35% of your gross income. On top of that lenders will add all other debts to come up with a Total Debt Service ratio (TDS), which cannot exceed more than 40% of your gross income.

Lenders will ask you about the following things:

You net worth (value of everything you own minus all debts)
Bank balances and all other investments
Other real estate that you may have
Personal assets such as cars, boats, bikes, and other expensive items
Your credit card balances and many other things

Your credit rating is a measure of your credit (your worthiness). It is a record of your borrowing and repayment. It covers how you've managed past debts of if you have filed for bankruptcy. You will be asked sign a form allowing your financial institution to gather information from your employer, creditors and credit rating agencies. Without a credit rating, it is highly unlikely for an institution to lend you money.

If you've had credit problems, it may be a good idea to check and clean them up before you apply for a mortgage. You can check your own credit rating by contacting a company that compiles the information. One source is the Trans Union Customer Relations Department, P.O. Box 338-LCD1, Hamilton, Ontario L8L 7W2. Simply send a note asking for your credit rating along with photocopies of two pieces of ID with your current address, plus a photocopy of a utility bill or credit card invoice. The process takes about two weeks and you'll get a good idea of how you'll be evaluated by the banks.)

If there is an outstanding debt, contact the creditor and resolve it. If you notice an error, report it immediately in writing and get it resolved.

Although your credit may not be perfect, it does not mean you are unable to purchase a home. Make sure you talk to a mortgage broker about your situation before you give up on your dream. Even if you can't buy now, your mortgage broker can help you re-establish your credit so that one day you will be able to live your dream of owning a home.

If you are a first time buyer, chances are that you won't be able to put a 25% down payment on your first house. You can purchase a home with as little as 10% or even 5% down payment. The bottom line is that if your down payment is less than 25% of the value of the home, you must purchase mortgage loan insurance. In Canada, most lenders are legally required to insure these high risk mortgages.

The following table will give you an idea of how much it may cost you.

Up to 75% Mortgage	No insurance is required
75.1 to 80% Mortgage	Premium is 1.25%
80.1 to 85% Mortgage	Premium is 2.00%
85.1 to 90% Mortgage	Premium is 2.5%
90.1 to 95% Mortgage	Premium is 3.75%