How to Qualify for a Mortgage in Canada
By Hami Tahm | Updated 29 May 2026 | 13 min read
How do you qualify for a mortgage in Canada?
To qualify for a mortgage in Canada, you need: a credit score of at least 680 (for A-lenders), sufficient income to pass the GDS (≤39%) and TDS (≤44%) ratio tests at the stress test qualifying rate, a minimum down payment of 5% for purchases up to $500,000, and verifiable employment or income history.
Key Takeaways
- Most Canadian A-lenders require a minimum credit score of 680; a score of 720+ qualifies you for the best rates.
- Your housing costs must not exceed 39% of gross income (GDS ratio) and all debts combined must not exceed 44% (TDS ratio) — both calculated at the stress test qualifying rate.
- The minimum down payment is 5% under $500,000 and 10% on the portion between $500,000 and $1.5 million; 20% avoids CMHC mortgage insurance.
- Self-employed borrowers qualify using a 2-year average of net business income from T1 Generals and Notices of Assessment — the same GDS/TDS and stress test rules apply.
- Gathering documentation early — T4s, NOAs, pay stubs, 90 days of bank statements — significantly speeds up the pre-approval process.
Disclaimer: This page is for informational purposes only and does not constitute financial, mortgage, or legal advice. Mortgage qualification rules, stress test rates, CMHC regulations, and government program limits are subject to change. Individual qualification outcomes depend on lender policies, credit history, income type, and other factors. Consult a licensed mortgage broker, financial advisor, or lender for advice specific to your situation.
How to Qualify for a Mortgage in Canada
To qualify for a mortgage in Canada, you must meet five key criteria: a minimum credit score (typically 680 for A-lenders), sufficient gross income to pass the GDS and TDS debt ratio tests, a minimum 5% down payment, stable or verifiable employment, and the ability to pass the mortgage stress test at your contract rate plus 2% or 5.25%, whichever is higher. Meeting all five is required to obtain an A-lender mortgage. Understanding where you stand on each — before you apply — lets you fix weaknesses before they become rejections. Think about how much you can afford alongside qualification by reading our guide on how much should you spend on a house.
The Five Qualification Criteria at a Glance
| Criterion | Minimum Requirement | Notes |
|---|---|---|
| Credit Score | 680 (A-lender) | 720+ for best rates; 600–679 via B-lender |
| GDS Ratio | ≤ 39% | Calculated at stress test qualifying rate |
| TDS Ratio | ≤ 44% | Includes all debts; calculated at stress test rate |
| Down Payment | 5% (under $500K) | 10% on $500K–$1.5M portion; 20% avoids CMHC |
| Employment / Income | 2 years verifiable history | Self-employed: 2-yr average net business income |
| Stress Test | Contract rate + 2% or 5.25% | Whichever is higher (OSFI B-20) |
Credit Score Requirements for a Mortgage in Canada
Most Canadian A-lenders require a minimum credit score of 680 to qualify for a standard mortgage. A score of 720 or above typically qualifies you for the best available rates. Scores between 600 and 679 may still qualify through B-lenders or mortgage brokers at higher rates. Scores below 600 generally require a private lender, a larger down payment, or time spent rebuilding credit before applying. Your credit score is pulled from Equifax Canada and TransUnion Canada — both bureaus are used, and lenders typically take the lower of the two scores.
Minimum Credit Score by Lender Type
| Lender Type | Min. Credit Score | Notes |
|---|---|---|
| A-lender (bank, credit union) | 680 | Best rates available at 720+; most borrowers target this tier |
| B-lender (alternative lender) | 600–650 | Higher rate; may allow larger TDS; used for self-employed or bruised credit |
| Private lender | No minimum | Rate-based risk pricing; short-term solution; last resort |
How to Improve Your Credit Score Before Applying
- Keep credit utilisation below 30% — your outstanding balance as a percentage of your credit limit is the fastest-moving factor in your score.
- Avoid new credit applications for 6 months before applying — each hard inquiry temporarily reduces your score and signals financial pressure to lenders.
- Dispute errors on your Equifax and TransUnion reports — paid debts still showing as unpaid, or accounts that aren't yours, can be corrected within 30 days and may add meaningful points.
- Do not close old accounts — length of credit history and available credit both factor into your score; closing old unused cards can lower it.
Income and Debt Ratio Requirements
Canadian mortgage lenders calculate your Gross Debt Service (GDS) ratio — housing costs divided by gross income — which must stay at or below 39%. Your Total Debt Service (TDS) ratio — all debts divided by gross income — must stay at or below 44%. Both ratios are calculated using the mortgage stress test qualifying rate, not your contract rate, which increases the income needed to qualify. For a detailed breakdown of income thresholds by purchase price, see our guide on income needed for a mortgage in Canada.
GDS and TDS Ratios Explained
GDS formula: (mortgage P&I + property taxes + heating + 50% of condo fees) ÷ gross monthly income ≤ 39%. TDS formula: GDS components + all other debt payments (car loans, student loans, credit card minimums) ÷ gross monthly income ≤ 44%. Use the mortgage affordability calculator to see your GDS and TDS ratios instantly. For a full explanation of the stress test, see our mortgage stress test explained guide.
Stress Test Rate (OSFI B-20)
Lenders calculate your GDS and TDS ratios using the stress test qualifying rate — the higher of your contract rate + 2% or 5.25%. This means a 4.79% contract rate becomes a 6.79% qualifying rate. See OSFI Guideline B-20 for the current floor. Use the mortgage stress test calculator to run your qualifying rate.
What Debts Count Against Your TDS?
- Car loans and car leases (monthly payment amount)
- Credit card minimums (typically 3% of the outstanding balance per month)
- Student loans (monthly payment as per loan agreement)
- Spousal or child support obligations (if court-ordered)
- Other mortgage payments on investment properties (at stress test rate)
Down Payment Requirements
CMHC Rule Update — December 2024
The insured mortgage cap increased from $1,000,000 to $1,500,000 effective December 15, 2024. First-time buyers and new construction buyers also gained access to 30-year amortization on CMHC-insured mortgages as of the same date. See the Government of Canada mortgage reform announcement.
In Canada, the minimum down payment is 5% on the first $500,000 of the purchase price and 10% on the portion between $500,000 and $1.5 million. A 20% down payment avoids CMHC mortgage insurance, which adds 2.8–4% of the mortgage amount to your balance. As of December 2024, CMHC insured mortgages are available on purchases under $1.5 million — up from the previous $1 million cap.
Minimum Down Payment by Purchase Price
| Purchase Price | Minimum Down Payment | CMHC Required? |
|---|---|---|
| Under $500,000 | 5% of purchase price | Yes |
| $500,001–$999,999 | 5% on first $500K + 10% on remainder | Yes |
| $1,000,000–$1,499,999 | 5% on first $500K + 10% on remainder | Yes (since Dec 2024) |
| $1,500,000+ | 20% minimum | No — conventional mortgage only |
Source: CMHC — Homebuying Step by Step.
Acceptable Down Payment Sources
- Personal savings — must be in your account for at least 90 days (seasoned funds); lender will request 90-day bank statements.
- Home Buyers' Plan (HBP) — withdraw up to $60,000 from your RRSP tax-free for a first home purchase (repay over 15 years). Use the down payment calculator to model your total down payment.
- First Home Savings Account (FHSA) — tax-free withdrawal for a first home purchase; $40,000 lifetime contribution limit.
- Gift from immediate family — acceptable with a signed gift letter confirming no repayment is expected; cash gifts that cannot be traced are not acceptable.
If you have verified income and strong credit but limited savings, some lenders offer zero down payment mortgage programs that finance the down payment through a separate loan. Note that closing costs (1.5–4% of purchase price) cannot be rolled into the mortgage — use the closing cost calculator to budget accurately.
How to Qualify for a Mortgage When Self-Employed in Canada
Self-employed borrowers in Canada qualify using the same GDS/TDS ratio and stress test rules as salaried applicants, but income verification differs significantly. Most A-lenders require the last two years of T1 Generals and Notices of Assessment and use the 2-year average net business income. B-lenders and some monoline lenders offer stated-income programs for self-employed borrowers with strong credit and a down payment of 20% or more. The same income thresholds apply — see our guide on income needed for a mortgage for qualifying figures by purchase price.
Income Documentation for Self-Employed Borrowers
- 2 years of T1 General tax returns (line 15000 — total income)
- 2 years of Notices of Assessment (NOAs) from the CRA
- Business registration or articles of incorporation
- 6–12 months of business bank statements (required by some lenders)
- Accountant-prepared financial statements (required by most B-lenders)
A-Lender vs. B-Lender for Self-Employed Mortgages
- A-lender uses your net income (after business expenses) as declared on your NOA — this often yields a lower qualifying income than your actual cash flow.
- B-lender may use gross revenue or a stated income amount with a 680+ credit score and 20%+ down payment.
- B-lender rate premium: typically 0.5–1.5% above A-lender rates.
- If you are incorporated, a 2-year T4 history from your own company qualifies you as a salaried employee rather than self-employed — often the cleaner path for A-lender approval.
Steps to Qualify for a Mortgage in Canada
Follow these seven steps to move from initial assessment to a signed mortgage commitment.
Step 1: Check your credit score
Obtain a free credit report from Equifax or TransUnion. Most A-lenders require a minimum score of 680. If your score is below this, take 6–12 months to improve it before applying — each hard inquiry reduces your score temporarily.
Step 2: Calculate your gross household income
Add up all verifiable gross income sources: employment income, rental income, and for self-employed borrowers, your 2-year average net business income from T1 Generals. Gross (before-tax) income is used for all GDS/TDS calculations.
Step 3: Check your GDS and TDS ratios
Estimate your Gross Debt Service (GDS) ratio: housing costs divided by gross monthly income, which must be 39% or less. Then calculate TDS (all debts ÷ gross monthly income), which must be 44% or less. Both ratios use the stress test qualifying rate (contract rate + 2% or 5.25%, whichever is higher).
Step 4: Save your minimum down payment
You need at least 5% on the first $500,000 of the purchase price and 10% on the portion between $500,000 and $1.5 million. Budget extra for closing costs (1.5–4% of purchase price).
Step 5: Gather your income documentation
Prepare your last 2 years of T4s or Notices of Assessment, recent pay stubs (2–3 months), a letter of employment confirming your salary and tenure, 90 days of bank statements for down payment sourcing, and if self-employed, 2 years of T1 Generals and business financial statements.
Step 6: Apply for a mortgage pre-approval
Submit your application to a lender or mortgage broker with all documentation. The lender will verify your income, pull your credit report, and issue a pre-approval letter with a rate hold (typically 90–120 days). A pre-approval is conditional — final approval requires a specific property.
Step 7: Lock in your rate and satisfy conditions
Once you have an accepted offer on a property, confirm your mortgage commitment with the lender. Provide any outstanding conditions (property appraisal, updated pay stub). The lender will issue a final commitment letter — your mortgage is approved.
Frequently asked questions
Disclaimer: This page is for informational purposes only and does not constitute financial, mortgage, or legal advice. Mortgage qualification rules, stress test rates, CMHC regulations, and government program limits are subject to change. Individual qualification outcomes depend on lender policies, credit history, income type, and other factors. Consult a licensed mortgage broker, financial advisor, or lender for advice specific to your situation.
▶ Check your numbers
- Mortgage affordability calculator (Canada)Enter your income, down payment, and debts — and get your qualifying mortgage amount in under a minute.
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