Qualification

Down payment

The cash you put toward the purchase. Minimums: 5% on the first $500K and 10% on the portion from $500K to $1.5M; at $1.5M or more, 20%. Below 20% requires CMHC, Sagen, or Canada Guaranty insurance.

On a $700,000 home the minimum down payment is $45,000 — 5% of the first $500,000 ($25,000) plus 10% of the next $200,000 ($20,000). Hitting 20% ($140,000) avoids default insurance entirely but is a far bigger cheque, so most first-time buyers go insured.

Lenders verify where the money came from. Savings, FHSA, RRSP Home Buyers' Plan, investments, and a documented gift from an immediate family member all qualify; unexplained large deposits don't. Build a 90-day paper trail before you apply.

More down isn't always better: putting exactly 20% down to dodge insurance can leave you cash-poor, while an insured 5–10% purchase keeps reserves for closing costs and emergencies. We model both so you choose with the real numbers in front of you.

Sources

How much you need for a down payment (Financial Consumer Agency of Canada)
Boldest mortgage reforms in decades come into force today (Dec 15, 2024) (Department of Finance Canada)

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Co-signer

A creditworthy individual (often a parent) who agrees to be equally liable for the mortgage so the primary applicant qualifies. The co-signer's income is added to the application; their credit is fully exposed.

Credit score

A 300–900 score from Equifax or TransUnion summarizing your credit history. Roughly 680+ opens the widest range of A-lender options; CMHC-insured mortgages need at least one borrower at 600 or higher; lower scores usually route to alternative (B) lenders.

Debt service ratio

The percentage of your gross income that goes to housing (GDS) or to housing plus all other monthly debt payments (TDS). On insured mortgages, CMHC caps GDS at 39% and TDS at 44%; the ratios are calculated at the stress-test qualifying rate.

GDS

Gross Debt Service ratio

Gross Debt Service ratio: your monthly housing costs (mortgage principal and interest, property tax, heating, and 50% of condo fees) divided by your gross monthly income. CMHC caps GDS at 39% on insured mortgages; uninsured and alternative lenders set their own limits.

Qualifying rate

The stress-test rate you must qualify at: the greater of your contract rate plus 2% or 5.25%. Doesn't change what you actually pay — only whether you qualify.

Stress test

The check that you could still afford your mortgage at a higher "qualifying rate": the greater of your contract rate + 2% or 5.25%. OSFI sets it for uninsured mortgages at federally regulated lenders, and the federal government applies the same test to insured mortgages. It limits how much you can borrow, not what you pay.

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