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Would I ever be qualified for a mortgage?

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Housing has become one of the most talked about topics in Canada, as the country deals with high interest rates affecting mortgages and approvals.

Frank Napolitano from Mortgage Brokers Ottawa joins CTV Morning Live to answer some of the most asked questions about the housing market, mortgage approval and finances.

We’re looking at buying our first home and have taken on second part-time jobs to help save for a down payment. Our bank says they won’t count that income when it comes to qualifying for a mortgage as we’ve only been at our part-time jobs for six months. Do all banks treat part-time income this way?

Napolitano says most banks treat part-time income this way, unless the job has guaranteed hours. He notes that, in general, banks ask for a two-year history when it comes to variable income.

“If an employer says to you ‘listen I want you to work every Friday and Saturday and we’re gonna give you 10 hours every week guaranteed,' then that income is eligible. So, it all depends on how it’s structured,” Napolitano added.

If you want to boost your chances of getting approval, Napolitano recommends getting a letter from your employer to prove guaranteed hours and two to three paystubs.

With employment numbers down in the month of March, is there any chance the Bank of Canada start dropping its prime rate?

Since the inflation numbers are down, there could be a rate-cut coming this summer, Napolitano says.

“It’s expected that the inflation will continue to come down. Despite the fact that oil prices have gone up, everything else seems to be trending down. So, there’s hope the Bank of Canada will lower the prime rate as early as June, if not June, then July seems a sure thing,” he added.

When interest rates come down, people renewing their mortgages will have a little bit of a relief, adds Napolitano.

The Bank of Canada held its policy rate at 5 per cent on Wednesday, saying it needs to see a sustained decline in inflation before rate cuts can begin. It has held its rate at 5 per cent since last July.

"I realize that what most Canadians want to know is when we will lower our policy interest rate," Bank of Canada governor Tiff Macklem said. "What do we need to see to be convinced it's time to cut? The short answer is we are starting to see what we need to see, but we need to see it for longer to be confident that progress toward price stability will be sustained."Canada's central bank projects inflation to ease from three per cent earlier in 2024 to 2.5 per cent by the end of this year. Inflation is expected to return to target by 2025, and fall to 2.8 per cent in February.

Macklem did leave the door open for a possible rate cut in June during a news conference with reporters in Ottawa on Wednesday.

"Yes, it is within the realm of possibilities," he said. 

How does the latest federal announcement help first-time buyers get approved?

On April 11, the federal government announced it will allow 30-year amortization periods on insured mortgages for first-time homebuyers purchasing newly built homes. According to Napolitano, expanding the amortization period to 30 years from 25 years will help buyers qualify for a mortgage easier.

However, the announcement comes with its own restrictions and Mortgage Professionals Canada CEO Lauren van den Berg says the government should expand the option to all Canadians purchasing a home, regardless of whether it is a new build or a pre-existing home.

"There are a lot of areas, particularly in the Greater Vancouver area and in the Greater Toronto Area, where you have no choice but to build up, so the possibility for new builds are not the same across the country," she said.

Ratesdotca mortgage and real estate specialist Victor Tran also raised concerns about how effective the change would be based on the eligibility criteria.

"While it's currently possible to get an insured mortgage with a new build, it's rare," he said in a statement.

Tran also pointed out many properties in Vancouver and Toronto are priced at more than $1 million, which typically means buyers have to take uninsured mortgages.

The government also announced that it will raise the amount first-time homebuyers can withdraw from their RRSPs -- to $60,000 from $35,000 -- to buy a home. That will take effect April 16, the day the federal budget is set to be released.

With files from The Canadian Press and CTV National News' Jordan Gowling

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