How to Apply for a Mortgage in Canada: Step-by-Step Guide (2026)

Applying for a mortgage in Canada involves several steps — from reviewing your finances and gathering documents, through pre-approval, to final approval and closing. Knowing the full process helps you move quickly when you find a home.

Step 1: Review Your Financial Situation

Before approaching any lender, take stock of your finances:

Credit score: Check your credit report through Equifax or TransUnion. CMHC-insured mortgages need a score of at least 600 for one borrower; banks’ best rates usually need more. Lower scores may still work with B-lenders.

Income stability: Lenders prefer at least 2 years of employment history. Self-employed borrowers need 2 years of NOAs (Notices of Assessment from CRA) and financial statements.

Debt levels: For an insured mortgage, your GDS (gross debt service) ratio can’t exceed 39%, and your TDS (total debt service) ratio can’t exceed 44%. These ratios include your mortgage payment, property taxes, heat, and 50% of condo fees, as a percentage of your gross income.

Down payment: Minimum 5% of the first $500,000, 10% of the portion above that for homes under $1.5 million, and 20% for homes of $1.5 million or more. A down payment of 20% or more avoids mortgage default insurance.

Step 2: Get a Mortgage Pre-Approval

A mortgage pre-approval is a conditional commitment from a lender that you qualify for up to a certain amount. Pre-approval is separate from a pre-qualification, which is an informal estimate.

Benefits of pre-approval:

• Rate hold, usually 90–120 days (protects you if rates rise)
• Confirms your maximum purchase price
• Shows sellers you are ready to buy
• Identifies any issues early

To get pre-approved, you provide income documents, ID, and consent for a hard credit check. The lender reviews your file and issues a letter stating how much they will lend and at what rate (subject to property approval).

Step 3: Gather Required Documents

Self-employed applicants also need business registration documents, 2 years of business financial statements, and potentially a 12-month business bank statement.

Step 4: Complete the Formal Application

Once you have an accepted offer on a home, your lender opens a formal mortgage application. This includes:

• Mortgage application form (MLS-style info on the property)
• Property details and purchase price
• Down payment source confirmation
• Updated documents if any circumstances changed since pre-approval
• Property appraisal (usually ordered by the lender)

Your lender or mortgage broker submits the application to the underwriting team.

Step 5: The Stress Test

Insured mortgages, and uninsured mortgages from federally regulated lenders, go through the mortgage stress test. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones.

The stress test reduces your maximum mortgage amount. Use our mortgage affordability calculator to see how this affects your purchasing power.

Step 6: Underwriting and Approval

The lender’s underwriter reviews your full file, the property appraisal, and your documents. This process typically takes 3–7 business days. The lender may come back with conditions — documents they need before final approval. Common conditions include:

• Updated pay stubs or employment confirmation
• A satisfactory property appraisal
• Proof that debts have been paid off
• Home insurance binder (proof of home insurance)
• Status certificate (for condos)

Once all conditions are cleared, you receive formal mortgage approval (the “commitment letter”).

Step 7: Review and Sign Mortgage Documents

Your lender sends the mortgage documents to your real estate lawyer (a notary in Quebec, and a lawyer or notary in BC). Your lawyer reviews the terms, explains the mortgage charge registered on title, and has you sign at a closing appointment — typically 1–3 business days before your closing date.

Step 8: Closing Day

On closing day, your lawyer receives the mortgage funds from the lender, pays the vendor, registers the title in your name, and hands over the keys. You pay the remaining closing costs at this point, which can include:

• Land transfer tax (provincial and municipal)
• Legal fees and disbursements
• Title insurance
• Mortgage insurance premium (if applicable, often added to the mortgage)
• Adjustments for prepaid property taxes or utilities

See the closing costs guide by province for estimates in each province.

Working with a Mortgage Broker vs. Bank

Brokers are often used when a situation is complex (self-employed, new to Canada, less-than-perfect credit, or a non-standard property), since they deal with more lenders.

Applying online vs in person

Common concerns about applying online

“What if I need to talk to someone?” Online brokers generally offer phone and video access to a licensed advisor, and some, such as True North, also have physical offices.

“Is my data secure?” Brokerages must follow federal privacy law (PIPEDA) or a provincial equivalent. Look for the lock icon in your browser and verify the URL matches the company’s official domain.

“Can I negotiate the rate?” Yes. Online brokers compete on rate, and a competing offer from another lender is often worth sharing; see the nesto review for one example of an online lender’s terms.

Key Takeaways

• Start with your credit score and income documentation before approaching lenders
• A pre-approval before house hunting holds a rate and gives sellers confidence
• The mortgage stress test cuts the maximum qualifying amount by about 17% at a 4.5% contract rate (25-year amortization)
• Final mortgage approval typically takes 5–10 business days once you have an accepted offer
• A mortgage broker compares rates from multiple lenders

Related: Mortgage Pre-Approval Guide · Documents Needed for a Mortgage · Mortgage Stress Test Explained · Home Buying Process Hub

Documents you need

Missing documents are the number one reason mortgage applications are delayed. Having everything ready before your first appointment can cut your approval time from weeks to days. Use this checklist to prepare for both pre-approval and final approval.

Pre-approval vs final approval documents

Identity documents

Income and employment documents

Salaried or hourly employees

Self-employed

Commission-based income

Rental income

Other income types

Down payment documents

Saved funds

Gifted down payment

RRSP Home Buyers’ Plan (HBP)

FHSA (First Home Savings Account)

Foreign funds

Property documents (final approval stage)

Debt documents

Checklist by applicant type

First-time buyer (salaried)

• Government-issued photo ID
• Social Insurance Number
• Letter of employment (recent)
• Last 2–3 pay stubs
• T4 slips (last 2 years)
• Notices of Assessment (last 2 years)
• 90-day bank statements (down payment account)
• Gift letter and donor bank statement (if applicable)
• FHSA/RRSP HBP withdrawal forms (if applicable)
• Signed purchase agreement
• Proof of property insurance

Self-employed buyer

• Everything in the salaried checklist, plus:
• T1 General tax returns (last 2 years)
• Business financial statements (last 2 years)
• Articles of incorporation or business licence
• Business bank statements (90 days)
• HST/GST returns (if requested)
• Client contracts (if applicable)

Newcomer to Canada

• Everything in the salaried checklist, plus:
• Permanent residency card or work permit
• International credit report (some lenders accept this)
• Foreign income documentation (if recently arrived)
• Proof of Canadian employment
• Letter from employer confirming start date and salary

Refinance or renewal with new lender

• Government-issued photo ID
• Current mortgage statement (showing balance, rate, maturity date)
• Property tax bill
• Income documents (same as above based on employment type)
• Home insurance policy
• Property appraisal (lender may order this)

Tips to speed up the process

1. Scan everything in advance — Have PDFs or clear photos of all documents on your phone or computer before your first meeting
2. Label your files clearly — Use descriptive names: “T4-2025-John-Smith.pdf” not “scan001.pdf”
3. Don’t redact information — Lenders need complete, unedited statements. Redacted documents are rejected
4. Explain large deposits — Lenders ask about deposits that aren’t your regular pay. Prepare a paper trail
5. Keep your finances stable: a new job, new credit or a large purchase between application and closing can delay or undo an approval
6. File your taxes on time — If your NOAs are not current, some lenders will request you file before proceeding

Documents for specific situations

Gift letter for a down payment

Home Buyers’ Plan withdrawal

FHSA withdrawal

Newcomers and non-permanent residents

Special Considerations

How long approval takes

Understanding the mortgage approval timeline lets you set realistic condition deadlines on offers and avoid the stress of wondering where things stand. Here is every stage and how long it actually takes.

The complete mortgage timeline

From accepted offer to closing, 30–90 days is typical; the closing date is set in the offer, and house hunting comes on top.

Pre-approval timeline by lender type

Documents you need (gather these first)

Having documents ready before you apply is one of the biggest factors in speeding up the process.

Employment and income

Down payment and assets

Property and debt

Identification

The lender will ask for government photo ID for every borrower; the mortgage document checklist lists every document, by applicant type.

What happens during the appraisal

The appraisal is often the stage where delays happen. Here’s what to expect:

If the appraisal is lower than the purchase price

This is more common than buyers expect, especially in hot markets. Your options:

Common delays and how to avoid them

How to speed up the process

1. Pre-approval first: it front-loads most of the paperwork
2. Complete documents: missing paperwork is a common delay
3. An experienced broker: brokers know which lenders move fastest
4. A realistic financing condition: 7–10 business days leaves more room than 5 in a busy market
5. Quick replies to lender requests: each day of delay can add a day to the timeline
6. No financial changes: a new job, new debt or a large purchase can reopen the approval
7. A lawyer lined up early: they need time for the title search and closing prep

Timeline for special situations

Financing condition deadline: How long to ask for

If you waive the financing condition and your mortgage then falls through, the seller can claim your deposit and sue for damages.

Underwriting

Once a mortgage application is submitted, an underwriter at the lender reviews the borrower’s income, credit, down payment and the property itself, and decides whether to approve the mortgage, approve it with conditions or decline it. This page walks through those steps, what each check looks at, the conditions that usually come with an approval and what the commitment letter says. It is part of the mortgage lenders and brokers guide.

The underwriting steps

1. File submitted. The bank or the borrower’s broker sends the application and documents to the lender.
2. File review. The underwriter checks that the required documents are there; the mortgage document checklist lists what lenders usually ask for.
3. Income verification. Employment and income are confirmed against the documents.
4. Credit assessment. The lender pulls a full credit report and reviews the score, payment history and existing debts.
5. Appraisal. The lender orders an appraisal (or uses an automated valuation model) to confirm the property’s value.
6. Debt service ratios. Housing costs and other debts are measured against income at the stress-test qualifying rate.
7. Down payment verification. The source of the down payment is traced.
8. Mortgage insurer review for a mortgage with less than 20% down.
9. Decision and commitment letter. The file is approved, approved with conditions or declined, and an approval comes with a commitment letter.
10. Conditions met before the lender funds the mortgage on closing day.

How many days this takes depends on the lender, the file and the time of year; how long mortgage approval takes covers typical timelines and what slows them down. A mortgage pre-approval covers part of the credit and income review in advance, but the full underwriting still happens once there is an accepted offer on a specific property.

What the underwriter evaluates

Income verification

Self-employed borrowers are usually qualified on the net income from their tax returns averaged over two years, which is why mortgages for self-employed borrowers need more paperwork than a salaried file. Commission earners face a similar averaging test, covered in mortgages with commission income.

For an insured mortgage, CMHC sets how much rental income can count. When the rental is the property being insured, up to 50% of its gross rent can be added to your income, and its taxes and heat can be left out of the ratios. How rental income counts toward a mortgage covers the other cases.

If the borrower’s job changes between application and closing, the lender re-verifies income; changing jobs while mortgage shopping covers how lenders treat that.

Credit assessment

Inquiries stay on a credit report for 3 years with Equifax and 6 years with TransUnion. A past consumer proposal or bankruptcy doesn’t rule out a mortgage, but it changes which lenders will look at the file and when.

Property assessment (appraisal)

Debt service ratios

The underwriter measures two ratios: gross debt service (GDS), the housing costs as a share of gross income, and total debt service (TDS), housing costs plus all other debt payments. For an insured mortgage, CMHC caps your housing costs at 39% of gross income (GDS) and your housing costs plus other debt payments at 44% (TDS); lenders set their own limits for uninsured mortgages. GDS and TDS explained shows how each is calculated, with worked examples.

Both ratios use the qualifying rate, not the rate on the mortgage. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. The mortgage stress test guide covers the rule’s history and exemptions.

Down payment verification

Lenders confirm that the down payment is the borrower’s own money (or a documented gift) and trace where it came from. They typically ask for recent bank statements, and question large deposits that the account history doesn’t explain.

Lenders also have anti-money-laundering obligations under FINTRAC rules, so funds without a clear documented trail (large cash deposits, transfers from unknown third parties) can delay or stop an approval.

Mortgage insurer underwriting

With less than 20% down, the mortgage must carry mortgage default insurance from CMHC, Sagen or Canada Guaranty, and the insurer reviews the file as well as the lender.

Approved with conditions

Most approvals come with conditions that must be satisfied before the lender funds the mortgage.

Common reasons for a decline

What to do when the bank denies a mortgage covers the options after a decline, and ways to qualify for a larger mortgage covers the levers on the ratios.

What tends to speed underwriting up

The commitment letter

The commitment letter (also called a mortgage approval or formal approval) is the lender’s written offer setting out the mortgage’s terms.

From commitment to closing

The employment letter

Income verification is a central part of any mortgage application, and an incomplete employment letter is a common cause of delays. This page has a template for the letter, what lenders look for in it and the income documents they ask for by type of employment. It is part of the mortgage lenders and brokers guide, and the mortgage underwriting process shows where income verification fits among the other checks.

What lenders need from employed borrowers

For salaried or hourly employees, lenders typically require:

Employment letter template

Below is a template covering what most Canadian mortgage lenders ask an employment letter to state. The employer adapts it and prints it on company letterhead.

[Company Letterhead]

Date: [Current date; many lenders want the letter dated within about 30 days]

To Whom It May Concern:

Re: Employment Confirmation for [Your Full Legal Name]

This letter confirms that [Full Legal Name] has been employed with [Company Name] since [Start Date: Month/Year] in the position of [Job Title] on a [full-time / part-time], [permanent / contract] basis.

Compensation details:

• Base annual salary: $[Amount]
• [OR] Hourly wage: $[Amount] at [Number] guaranteed hours per week
• Regular overtime (2-year average): $[Amount] per year
• Annual bonus (2-year average): $[Amount] per year
• Commission income (2-year average): $[Amount] per year

[Employee Name] is not currently on probation and their employment is in good standing.

Should you require further verification, please contact:

[Manager/HR Name] [Title] [Phone Number] [Email Address]

Sincerely,

[Signature] [Printed Name] [Title] [Company Name]

Critical elements lenders look for

Income verification by employment type

Full-time permanent employees

Part-time employees

Contract / term employees

Lenders are more cautious with contract workers, and a record of continuous contracts in the same field over two or more years makes the income easier to accept.

Commission-based employees

Lenders usually average commission income over two years of T4s and Notices of Assessment, and the employment letter should state the base salary (if any) separately from commissions. Mortgages with commission income covers how lenders average it and what happens when commissions fall.

Self-employed borrowers

A self-employed borrower has no employer to write a letter, so lenders rely on two or more years of tax returns, Notices of Assessment and business records instead, and they qualify the borrower on the net income those returns show. Mortgages for self-employed borrowers covers the documents, how income is calculated and the options when reported income is low.

Verification calls

After receiving the employment letter, many lenders make a verification call to the employer:

Some practical points that reduce delays:

• HR or the manager named in the letter can expect a call, and the contact person needs to be reachable.
• Some employers have a policy against confirming income by phone; a broker or lender can usually work around this with pay stubs and a T4 if they know in advance.

When the job changes or you’re on leave

A lender re-verifies employment before closing, so a new job between application and closing usually means a new employment letter and pay stubs from the new employer; changing jobs while mortgage shopping covers how lenders treat each kind of change. Borrowers on parental leave usually need a letter confirming the return date and the salary they return to, covered in getting a mortgage on maternity leave.

The bottom line

A complete employment letter on letterhead, recently dated, with base pay and variable pay shown separately and a reachable contact, is one of the simpler parts of a mortgage application, and a missing detail is a common cause of delays. Self-employed borrowers have more to assemble, because tax returns replace the letter. Once income is documented, the other checks are covered in what underwriters review and how lenders read bank statements.

Bank statements and spending

Most lenders ask for about 90 days of statements from every account you hold, alongside your pay stubs, tax documents and credit report. They aren’t judging your coffee habit. They read the statements for a handful of specific things: that your income is what you said it is, that the down payment is yours, that there are no debts missing from the application, and that you’ll still have a cushion after closing. This page covers what they look for and how to get your statements ready. It is one of our guides to mortgage lenders and brokers.

What lenders look for

Income

The down payment and its 90-day trail

Lenders trace where the down payment came from and how it built up, usually over at least the last 90 days. Money that appears suddenly needs a paper trail, because it could be a loan that belongs in your debt ratios.

How to build the down payment in the first place, including how the FHSA, the RRSP Home Buyers’ Plan and a TFSA can be combined, is covered in how to save for a down payment, the RRSP Home Buyers’ Plan guide and using your TFSA for a down payment. The minimum amount is a rule: The minimum down payment is 5% of the first $500,000 and 10% of the rest for homes under $1.5 million, and 20% at $1.5 million or more.

Debts that aren’t on the application

Lenders compare your statements with your credit report. Regular payments that don’t appear on the report raise questions:

• payments to a lender or finance company you didn’t list;
• buy-now-pay-later instalments;
• regular transfers to a private person, which can look like an informal loan.

Each one found can be added to your TDS ratio, and an undisclosed debt can end an application.

Cash-flow red flags

What lenders don’t care about

Ordinary spending (restaurants, clothes, subscriptions, travel, hobbies) isn’t a reason to decline. What matters is whether, after that spending, the income supports the mortgage, which is what your debt ratios measure.

Large deposits and money-laundering checks

Mortgage lenders are reporting entities under Canada’s anti-money-laundering law, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, so they verify where large or unusual deposits came from, and FINTRAC sets the rules (see FINTRAC’s guidance for the mortgage sector). Under FINTRAC’s rules, a reporting entity must submit a Large Cash Transaction Report when it receives $10,000 or more in cash in a single transaction (FINTRAC). For a mortgage file, any deposit that doesn’t fit your income or has no clear source gets questions, whatever its size.

Cash with no paper trail, repeated transfers between accounts and deposits from unrelated third parties draw the most scrutiny, and a lender can ask for more than 90 days of history when something looks unusual.

Savings beyond the down payment

Lenders also look at what you’ll have left after closing.

Steady savings can also help a borderline file: a long record of regular deposits and a cushion after closing reassure an underwriter when the credit score or ratios are close to a limit (see the underwriting process).

Getting your statements ready

Before you apply

If your recent statements look messy

1. Wait for cleaner months. Applying once you have three months of steady statements is often the simplest fix.
2. Explain one-off problems. A short letter of explanation can resolve a single NSF from a billing error.
3. Use a broker. Lenders differ in how they read statements, and a broker knows which are more flexible (see what a mortgage broker does).
4. Disclose every account. Leaving out an account that holds down payment funds stops the file once it’s found.

If an application has already been declined over income, savings or a deposit, see what to do when your mortgage is denied. The full list of documents lenders ask for is in the mortgage document checklist.

Changing jobs

A job change during the home-buying process is a common cause of last-minute delays and, occasionally, a declined mortgage. Lenders don’t object to new jobs as such; what matters is whether the new income is as stable and as easy to verify as the old one. This page covers how lenders view each kind of change, when in the process a change causes the most trouble, and what documents a lender asks for afterwards. It is part of the mortgage lenders and brokers guide.

How lenders evaluate employment

Lenders want to know whether the borrower can reliably make the payments. They assess employment on:

Verification of employment

The lender confirms employment at least once and often twice:

1. At application or pre-approval, when it confirms the current job, salary and position.
2. Before closing, when it re-confirms the borrower is still employed on the same terms.

That second check is why a mid-process job change can cause problems: the approval was based on income that may no longer exist in the same form. The mortgage underwriting process shows where these checks fall among the lender’s other reviews.

Scenarios: how different job changes affect a mortgage

Usually low risk

Typically requested: a new employment letter, a recent pay stub from the new employer and a short explanation letter.

Medium risk: extra documentation likely

Typically requested: the offer letter, the employment contract and an explanation of the change. Some borrowers add a co-applicant or guarantor; co-signing a mortgage covers what that involves for both people.

High risk: may delay or stop an approval

In these cases the options are usually to wait until the new income has a track record, add a co-applicant, or restart the application with a lender that fits the new situation.

Timing: when a job change matters most

If a job change happens during the process

Telling the broker or lender early

Lenders find out at the pre-closing verification anyway. Raising the change early lets a broker assess its effect on qualification, gather the documents and, if needed, move the file to a lender with more flexible income rules. Questions to ask a lender or broker includes what to ask about income changes.

The employment letter from the new employer

The new employer’s letter on company letterhead confirms the position, start date, pay (base, bonus and commission shown separately) and employment type, signed by HR or a manager with contact details. The mortgage employment letter template shows what lenders expect it to state.

Supporting documents

Keeping the rest of the file stable

After a job change, the lender looks harder at everything else. New debt, large purchases, new credit applications and unexplained movements in bank statements all add questions at a point when the file already needs re-approval.

Special situations

Moving to self-employment

Leaving a salaried job to become self-employed usually means waiting for two years of self-employment tax returns before most banks will use that income; mortgages for self-employed borrowers covers the documents and the lenders that are more flexible. Some borrowers close on the mortgage while still salaried and make the change afterwards.

Moving to commission or variable pay

New commission earners have no track record to average, so some lenders use only the base salary until there is a history. Mortgages with commission income covers how lenders average commissions.

Maternity or parental leave

Getting a mortgage on maternity leave covers what lenders ask for in more detail.

Commission income

Commission income is common in Canada: real estate agents, car salespeople, financial advisors, insurance brokers, pharmaceutical reps and many technology sales professionals earn a large share of their pay through commissions. When your income varies month to month, the amount you can borrow depends on how a lender averages and verifies it. This page covers how lenders count commission income, for employees paid on a T4 and for self-employed commission earners. It’s part of our mortgage lenders and brokers guide.

How lenders classify commission income

Key distinction: an employee earning commission on a T4 is treated differently from a self-employed commission earner reporting business income on a T1. The employee route is simpler. Self-employed agents and brokers are qualified the way any business owner is, on net income after expenses; the self-employed mortgage guide covers that in full.

How lenders calculate commission income

The two-year averaging method

Most lenders use this approach:

Qualifying income = the lower of the two-year average and the most recent year

Declining income draws caution. Lenders want to see stable or growing commission earnings, and a sharp drop can lead to a decline or a request for a recent pay statement showing a recovery.

Base + commission

Lenders count a guaranteed base salary in full. How much of the commission they count varies: some use the full two-year average, others count only part of it, especially when commission is a large share of pay or the history is short.

Lender types and commission income

The best mortgage lenders in Canada page compares named lenders.

Required documentation

For T4 commission employees

For self-employed commission earners

The full mortgage document checklist lists what every borrower needs.

Qualification examples

Example 1: sales rep with base + commission

Example 2: real estate agent (100% commission, self-employed)

Example 3: new commission earner (less than two years)

Ways to strengthen an application

Commission income and the stress test

Commission income is tested at the same qualifying rate as any other income. Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. The stress test guide explains it in full, and the GDS and TDS limits set how much of your qualifying income can go to housing and debt.

Common challenges

Parental leave

Being on maternity or parental leave doesn’t have to stop a mortgage. Most lenders can qualify you on your pre-leave salary rather than your EI benefits, as long as your employer confirms in writing that you are coming back. The harder part is often the months of reduced income after closing. This page covers both: qualifying while on leave, and keeping up with the payments until you return. It is one of our guides to lenders, brokers and special situations.

How lenders treat income on leave

Lender policies differ on how close your return date must be to closing and on contract or recently hired employees, so it’s worth asking before you apply; a broker can steer the file to a lender whose policy fits (see what a mortgage broker does).

The return-to-work letter

This letter from your employer is what lets a lender use your full salary. It usually needs:

A letter that says you “intend” or “may” return usually isn’t enough. The broader employment letter page has a template for the standard letter lenders ask for.

Why leave applications get declined

What you’ll receive while on leave

EI maternity benefits replace 55% of insurable earnings for up to 15 weeks. Standard parental benefits pay the same rate for up to 40 weeks shared between parents (one parent can take up to 35), and extended parental benefits pay 33% for up to 69 weeks shared (up to 61 for one parent). In 2026 the weekly maximum is $729, or $437 on extended parental. Eligibility, the waiting period and sharing rules are in the EI maternity and parental benefits guide.

Extended leave spreads its total over many more weeks, so each month’s income is much lower. EI benefits are taxable.

In Quebec, the Quebec Parental Insurance Plan replaces EI. Under its Basic Plan, maternity benefits pay 70% for 18 weeks, up to $1,386.54 a week in 2026; the plans are compared in the EI benefits guide.

Employer top-ups

Many employers top up EI to a share of your salary for part or all of the leave; the level and length depend on the employer, the collective agreement and your tenure. If you have one, include the top-up letter with the application, since some lenders will count it for the period it’s paid.

Two qualification examples

The limits behind those numbers: For an insured mortgage, CMHC caps your housing costs at 39% of gross income (GDS) and your housing costs plus other debt payments at 44% (TDS); lenders set their own limits for uninsured mortgages. You qualify at the greater of your contract rate plus 2% or 5.25%. Both are explained in GDS and TDS ratios and the stress test.

Self-employed and on leave

Self-employed parents can get EI special benefits only by registering in advance: you must wait 12 months after registering before you can claim. With no employer, there is no return-to-work letter, so lenders lean on your last two years of notices of assessment and on evidence that the business will resume (contracts, clients, continued activity during the leave). The rest of the self-employed approval process is in getting a mortgage when self-employed.

Affording the payments during leave

Qualifying on your full salary doesn’t change what arrives in your account while you’re on leave. A simple plan, made six to twelve months before the due date, keeps the mortgage on track.

1. Work out the gap

2. Build a leave fund

Dividing the total gap by the months left before the leave gives the monthly saving needed. A TFSA savings account keeps the fund accessible, with withdrawals tax-free and the room restored the following January.

3. Look at your mortgage options before the leave starts

Lenders assess these changes on your current income, so arranging them before the leave, while you’re on full pay, is usually easier. Lengthening the amortization is covered in extending your mortgage amortization, and the trade-off between a cash cushion and prepaying in emergency fund vs mortgage paydown.

4. Count the Canada Child Benefit

The Canada Child Benefit starts after the birth once you apply, and it is based on the previous year’s family net income, so a drop in income during the leave raises the benefit only from the following July. Amounts are in Canada Child Benefit amounts.

5. Plan the return

Childcare is a new monthly cost once you go back, and licensed spaces can have long waitlists, so checking availability and cost three to six months before your return keeps the budget realistic. Once you’re back on full pay, restoring your payment schedule and rebuilding the leave fund come first.

If you fall behind

Calling the lender before a payment is missed gives you the most options (a deferral, a temporary reduction, or adding the missed amount to the balance). What a missed payment costs and what lenders can offer is in missing a mortgage payment; free, non-profit credit counselling is described in credit counselling in Canada.

Step by step

1. Get the return-to-work letter, with a specific return date and salary.
2. Gather two years of T4s or notices of assessment, recent pre-leave pay stubs and your EI benefit statement (see the mortgage document checklist).
3. Work out the gap during the leave and how you’ll cover it.
4. Talk to a lender or broker about its leave policy before a formal application.
5. Get a pre-approval from the lender that fits.
6. Build the leave fund before closing.

Other ways to qualify on non-standard income are in commission income and disability income.

Disability income

Disability income can qualify you for a mortgage in Canada. What lenders want to know is how long it will continue, whether it’s taxable, and whether it’s enough on its own. This page covers how each type is counted, how a “gross-up” works for non-taxable benefits, the documents lenders ask for, and the usual ways to close a gap. It is part of our guides to lenders, brokers and special situations. If you already own a home and are worried about keeping it after a disability, see your mortgage if you become disabled.

How lenders look at each type

Lender policies on provincial programs and on income with a review date vary more than on CPP-D or a long-standing LTD claim, which is where a broker who knows each lender’s policy helps (see what a mortgage broker does).

Gross-up for non-taxable income

A dollar of non-taxable income buys more than a dollar of taxable salary, so many lenders “gross up” non-taxable benefits, counting them as if they were higher pre-tax income. The amount of the gross-up (often expressed as a percentage, commonly up to 25%) and which benefits qualify are each lender’s own policy, and some lenders don’t gross up at all. Taxable benefits such as CPP-D and employer-paid LTD are already gross income and aren’t grossed up.

Is your LTD benefit taxable?

Amounts at a glance

On their own, provincial program amounts support only a small mortgage, so most buyers on those programs qualify with a co-borrower, other income or a large down payment. Private LTD typically replaces a share of pre-disability earnings set by the policy.

Ways to close a gap

Combine income

A partner’s employment income, part-time work, a pension or rental income can all sit alongside disability income on one application. Each is documented the usual way (see the employment letter and, for a co-borrower or guarantor, co-signing a mortgage).

A larger down payment

A smaller mortgage needs less qualifying income at the lender’s debt ratio limits: For an insured mortgage, CMHC caps your housing costs at 39% of gross income (GDS) and your housing costs plus other debt payments at 44% (TDS); lenders set their own limits for uninsured mortgages. The ratios are applied at the stress-test rate, not your contract rate (see GDS and TDS ratios).

A different lender

Credit unions and B-lenders may accept income a bank won’t, often at a higher rate: see the best mortgage lenders in Canada and the B-lenders compared.

Benefits, assets and the RDSP

• Asset limits. Provincial programs limit the savings you can hold. ODSP’s limit for a single person is $40,000, and it doesn’t count the home you own and live in, your primary vehicle, RESPs and RDSPs. A down payment saved above a program’s limit can affect your benefits before the purchase closes, so the timing is worth checking with the program first.
• RDSP withdrawals. You can withdraw from an RDSP toward a home, but government grants and bonds paid into the plan in the 10 years before a withdrawal may have to be repaid; see RDSP withdrawal rules. The RRSP Home Buyers’ Plan doesn’t apply to an RDSP.

Documents lenders ask for

Common problems

Other non-standard income is covered in commission income, maternity or parental leave and self-employed mortgages.

If you are declined

A declined mortgage application is rarely the end of the road. Lenders decline against specific thresholds, so the reason for the decline tells you what has to change, how long that is likely to take, and whether a different lender would see the same application differently. This guide is part of our mortgage lenders and brokers guides.

Why mortgage applications get declined

Every lender checks the same handful of things. Falling short on any one of them can end the application.

The two ratio limits and the stress test are rules, not lender preferences:

• For an insured mortgage, CMHC caps your housing costs at 39% of gross income (GDS) and your housing costs plus other debt payments at 44% (TDS); lenders set their own limits for uninsured mortgages. How each ratio is built is explained in GDS and TDS ratios.
• Lenders check that you could afford the payments at the greater of your contract rate plus 2% or 5.25%, a floor set by OSFI for uninsured mortgages and by the federal government's mortgage insurance rules (the Minister of Finance's Eligible Mortgage Loan Regulations) for insured ones. See the mortgage stress test for worked examples.
• For a CMHC-insured purchase, at least one borrower or guarantor needs a credit score of 600 or more; CMHC may use other ways to judge creditworthiness for a borrower with no credit history. What lenders want above that floor is covered in the credit score needed for a mortgage.

Step 1: Find out exactly why

Most lenders will tell you the reason if you ask, and the precise threshold you missed shows how much needs to change. Call the mortgage specialist or broker who handled the file and ask:

• Which ratio failed, GDS or TDS, and by how much?
• Was it the credit score? What is this lender’s minimum?
• Did the appraisal raise a concern about the property?
• Could the lender verify your income and your down payment?

Then pull your credit reports from both Equifax and TransUnion (the FCAC explains how to order them) and look for:

• Errors: accounts that aren’t yours, wrong balances, or paid debts still shown as delinquent. Errors can be disputed with each bureau, and a dispute can take weeks.
• Collections: old accounts sent to collections that you may have forgotten.
• High balances: card balances that use a large share of their limits pull scores down (see credit utilization).
• Missed payments: even one recent late payment can lower a score noticeably.

Step 2: Match the fix to the reason

How each lever works is covered on its own page: qualifying for a larger mortgage, improving your credit score before you apply, what lenders look for in your bank statements, how credit card debt changes your maximum mortgage and changing jobs during the mortgage process. Down payment savings through an FHSA or the RRSP Home Buyers’ Plan are explained in how to save for a down payment.

If you’re self-employed

Lenders qualify self-employed borrowers on the income reported on their tax returns, not on business revenue, so heavy write-offs are a frequent reason for a decline. The options (declaring more income for two years, a lender that uses business-for-self programs, a larger down payment) are compared in getting a mortgage when self-employed, and stated-income mortgages explains how those programs verify income.

If it was a consumer proposal or bankruptcy

A recent insolvency usually means a B-lender or private lender first, then a move back to a bank once the record ages. The waiting periods are covered in a mortgage after a consumer proposal and a mortgage after bankruptcy.

Step 3: Choose where to apply next

The bank that declined you applied its own criteria. Another lender’s may fit your profile better, which is why the channel matters as much as the fix.

• A mortgage broker sends one application to the lender most likely to approve it, instead of you applying at several banks and collecting several hard inquiries. Brokers are usually paid by the lender on standard (A-lender) mortgages; how mortgage brokers get paid explains when a borrower pays a fee, and the best mortgage brokers in Canada compares them. The trade-offs between a broker, a bank and an online lender are in mortgage broker vs bank vs online lender.
• Credit unions and monoline lenders set their own guidelines, and some are more flexible on income or property type than a big bank. See the best mortgage lenders in Canada and big bank vs monoline lenders.
• B-lenders (trust companies such as Equitable Bank and Home Trust) approve near-prime borrowers and non-standard income at higher rates and usually with a lender fee. What a B-lender is and how the exit back to a bank works is explained in B-lender mortgages; the named lenders are compared in the best B-lenders, and lenders by credit band in mortgage lenders for bad credit.
• Private lenders lend mainly against equity, for short terms and at much higher cost, so they work only with a clear plan to refinance or sell. See private mortgage lenders in Canada.
• A co-signer or co-borrower adds income or credit strength, and becomes fully liable for the debt: see co-signing a mortgage.
• Rent-to-own is an option when approval is one to three years away, with less choice of homes and a higher total cost: see rent-to-own homes in Canada.

Rates for each lender type move with the market; current figures are on today’s mortgage rates.

Common mistakes after a decline

• Applying at several more banks right away. Each application can add a hard inquiry, and if the problem is your ratios or your credit, the answer will be the same.
• Taking on new debt to bridge the gap. A personal loan for the down payment raises your TDS and usually makes approval harder.
• Misrepresenting anything on the next application. Mortgage fraud is a crime under the Criminal Code (up to 14 years in prison where the value exceeds $5,000). Lenders verify income, employment and the source of the down payment, and a material misrepresentation can lead to the mortgage being cancelled or called, and to criminal charges.
• Treating it as permanent. Most reasons for a decline can be fixed within months.

How long before you can apply again

Before reapplying, a broker or lender can do a preliminary review of the file, so the next formal application (and its credit check) goes only to a lender whose criteria you meet. The rest of the approval process, from pre-approval to the underwriting review, is covered in how the home buying process works.

Related pages

• If your mortgage application is denied
• Mortgage Broker vs Bank vs Online Lender in Canada
• How to Negotiate Your Mortgage Rate in Canada
• Mortgage Underwriting Process in Canada
• Mortgage Employment Letter Template Canada
• Do Lenders Check Your Bank Statements and Spending for a Mortgage?
• Self-Employed Mortgage in Canada
• Mortgages for Newcomers and Immigrants in Canada
• GDS and TDS Ratios for Canadian Mortgages
• Mortgage Default Insurance (CMHC Insurance) in Canada
• Canada Mortgage Rates
• Monthly Carrying Costs of Owning a Home in Canada
• Work-From-Home Tax Deduction for Employees in Canada
• Mortgage Renewal in Canada
• How Rental Income Is Taxed in Canada