How to get a mortgage in Canada

Securing a mortgage in Canada involves meeting strict financial criteria, passing a stress test, and navigating down payment rules updated in 2026. With President Trump's influence on global markets and higher interest rates persisting into February 2026, preparation is key for buyers in competitive markets like Toronto or Vancouver.

Assess Your Financial Readiness

Start by checking your credit score, ideally 680+ for best rates, though 600 qualifies for insured mortgages with adjustments to debt ratios. Lenders verify two years of income via T4s, NOAs, and pay stubs; self-employed need detailed tax returns.

Calculate affordability using Gross Debt Service (GDS) under 39% and Total Debt Service (TDS) under 44% of income, including the mortgage stress test at 5.25% or contract rate +2%—whichever is higher. For a $100,000 income, this might limit you to around $600,000-$700,000 mortgage depending on debts.

Save for closing costs: 1.5-4% of purchase price covers land transfer tax, legal fees, and appraisals. Use government rebates like Ontario's land transfer tax refund for first-time buyers up to $4,000.​

Determine Down Payment Requirements

Minimum down payment is 5% on the first $500,000, plus 10% on the portion up to $1.5 million; over $1.5 million requires 20% minimum, uninsured. First-time buyers or new builds can now amortize insured mortgages over 30 years since December 2024 rules.

For a $800,000 home: 5% ($25,000) on first $500k + 10% ($30,000) on $300k = $55,000 total. Gifted funds from family count fully for down payments.​

Get Pre-Approved and Shop Lenders

Contact a mortgage broker for free access to multiple lenders—banks, credit unions, or private options. Pre-approval locks a rate for 90-120 days and shows sellers you're serious.​

Compare fixed (stable payments) vs. variable (tied to prime rate, currently around 5-6% in 2026). Stress test applies universally per OSFI rules, ensuring you afford hikes.

Documents needed: ID, 90-day bank statements, employment letter, tax returns. Brokers handle the underwriting, often faster than direct bank apps.​

Choose Mortgage Insurance if Needed

Down payments under 20% require CMHC, Sagen, or Canada Guaranty insurance (2.4-4% premium added to loan). It protects lenders but raises your costs—shop insurers for lowest rates.

New 2026 OSFI caps may limit loans to 4.5x income on uninsured mortgages, aligning with global standards like the UK's. First-time buyers benefit most from insured flexibility.​​

Application and Closing Process

Submit a firm purchase offer with financing conditions. Lender appraises property and verifies income; approval takes 5-10 days.​

At closing (30-90 days post-offer), lawyer handles title transfer, funds disbursement. Expect a final stress test recalculation—rates can shift.​

First-Time Buyer Incentives

Use the Home Buyers' Plan (withdraw $60,000 tax-free from RRSP) or First Home Savings Account (FHSA, up to $40,000 tax-free savings). Property Transfer Tax exemptions apply in BC, similar rebates elsewhere.​

In 2026, with 60% of mortgages renewing amid higher rates, refi options like switching lenders avoid penalties via prepayment privileges.​

Common Pitfalls to Avoid

Don't max your pre-approval—budget for utilities, maintenance (1-2% home value yearly). Hidden debts tank TDS ratios; pay down credit cards first.

Regional tips: High LTT in Ontario (stacked on municipal); Vancouver's foreign buyer tax adds 20% for non-PR. Self-employed face stricter income proof.​

Long-Term Management

Opt for 25-year amortization standard, but 30-year insured lowers payments. Recast post-downsizing or review at renewal—2026 sees many facing 2-3% rate jumps.

Work with a broker annually; portable mortgages follow you when moving. Track equity buildup for future HELOCs.​

Getting a Canadian mortgage demands discipline, but incentives and brokers simplify it. Start with credit repair and savings today for homeownership success