Everything you need to know about financing your home purchase.
Pre-approval is a lender's conditional commitment to lend you a specific amount. It locks your rate for 90–120 days and shows sellers you're serious. You'll need: T4 slips, Notice of Assessment (2 yrs), pay stubs, bank statements, and ID.
A fixed rate stays the same for the full term — ideal for stability. A variable rate fluctuates with the Bank of Canada's prime rate — historically lower but carries risk. Variable works well in declining rate environments; fixed gives peace of mind.
An open mortgage lets you pay it off at any time without penalty — great for short-term situations. A closed mortgage has prepayment restrictions but offers significantly lower rates. Most home buyers choose closed.
This is the total length of time to pay off your mortgage. Maximum insured amortization is 25 years (30 years for first-time buyers on new builds). Longer = lower payments but more total interest paid.
The term is the period your mortgage contract is in force (commonly 1–5 years). At renewal you renegotiate. The 5-year fixed is Canada's most popular term.
If your down payment is under 20%, you need mortgage default insurance (CMHC, Sagen, or Canada Guaranty). The premium (2.8%–4%) is added to your mortgage. It protects the lender but enables higher-ratio borrowing.
Minimum 5% on homes under $500K; 5–10% on the $500K–$999K portion; 20% required on homes over $1M. First-time buyers can use RRSP funds (Home Buyers' Plan) or the new First Home Savings Account (FHSA).
All federally regulated lenders apply a stress test: you must qualify at the higher of your contract rate +2% or 5.25%. This ensures you can afford payments if rates rise.