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Qualification snapshot

The numbers a Canadian lender measures you against.

One page for every threshold that decides a Canadian mortgage file, each one labelled with the authority that sets it and the date we last read it. Regulation, insurer program rules, tax limits and market observations are different things — this page keeps them apart.

By the Canadian Mortgage Compass Editorial DeskLast reviewed Editorial policy
On this page
  1. 01Executive summary
  2. 02The verified numbers
  3. 03Who sets what
  4. 04Insurance premium bands
  5. 05Worked example
  6. 06Policy rate vs your rate
  7. 07Where it varies
  8. 08Failure modes and recovery

Executive summary

The verified numbers

Each row states the value, the kind of authority behind it, and the date that value was read from its primary source. Nothing here is copied from another commentary site.

Canadian mortgage qualification thresholds with the authority and observation date for each
ThresholdValueSet byAs of
Minimum qualifying rateGreater of contract rate + 2.00% or 5.25%Federal regulator2026-07-31
Bank of Canada policy interest rate2.25%Market observation2026-07-29
Prime rate (Bank of Canada published series)4.45%Market observation2026-07-29
Minimum down payment, price up to $500,0005% of the purchase priceDefault insurer program2026-07-31
Minimum down payment, $500,000 to $1,499,9995% of the first $500,000 plus 10% of the remainderDefault insurer program2026-07-31
Minimum down payment, $1,500,000 and above20% of the purchase priceDefault insurer program2026-07-31
FHSA contribution limits$8,000 per year, $40,000 lifetimeTax law2026-07-31
Home Buyers' Plan withdrawal limit$60,000 per eligible individualTax law2026-07-31
Maximum amortization, insured purchase25 years, with 30 years available on defined first-time-buyer and new-build programsDefault insurer program2026-07-31
Maximum loan-to-value on a refinance80% of appraised valueFederal regulator2026-07-31
Maximum revolving HELOC portion65% of value, within a 80% combined limitFederal regulator2026-07-31
Canadian mortgage qualification thresholds with the authority and observation date for each

The full source list, with what each authority governs, is on the evidence desk.

Who sets what — and why the difference matters

Definition

Three kinds of 'rule'
A federal regulatory expectation applies to federally regulated lenders and does not bend. A default insurer program rule applies only where the mortgage is insured, and differs between insurers and programs. A lender policy is a commercial decision that changes when the lender's appetite changes. Most of what borrowers are told is "the rule" is actually the third kind.

This distinction is the single most useful thing to carry into a lender conversation. If a threshold comes from regulation, arguing is pointless and restructuring the file is the only route. If it comes from insurer program rules, a different program may fit. If it is lender policy, a different lender may simply say yes.

Default insurance premium bands

Where the down payment is under 20%, default mortgage insurance is required. The premium is a percentage of the loan amount, normally added to the principal rather than paid in cash, and it is charged on the standard purchase program. Premiums for other programs — extended amortization, self-employed or rental programs, and portability or top-up scenarios — can differ, and surcharges may apply.

Standard purchase default-insurance premium by loan-to-value
Loan-to-valueDown paymentPremium on loan amount
Up to 65%35% or more0.60%
65.01% – 75%25% – 34.99%1.70%
75.01% – 80%20% – 24.99%2.40%
80.01% – 85%15% – 19.99%2.80%
85.01% – 90%10% – 14.99%3.10%
90.01% – 95%5% – 9.99%4.00%
Standard purchase default-insurance premium by loan-to-value

Provincial sales tax on the premium applies in some provinces and, where it does, it is payable in cash at closing rather than added to the mortgage. Run your own numbers with the insurance premium calculator.

Worked example: how the thresholds stack

Worked example

$750,000 purchase, 10% down, 4.29% contract rate

Purchase price
$750,000
Down payment
$75,000 (10%)
Contract rate
4.29%
Qualifying rate
6.29%

Step 1 — minimum down payment. 5% of the first $500,000 is $25,000, plus 10% of the remaining $250,000 is $25,000, so the minimum is $50,000. A $75,000 down payment clears it, but stays under 20%, so the mortgage must be insured.

Step 2 — base loan and premium. $750,000 − $75,000 = $675,000. The loan-to-value is $675,000 ÷ $750,000 = 90.0%, which sits in the 85.01–90% band at 3.10%. The premium is $675,000 × 3.10% = $20,925, added to the loan for a total of $695,925.

Step 3 — qualifying rate. The contract rate plus two is 6.29%, which is higher than 5.25%, so 6.29% is the test rate.

Step 4 — qualifying payment. Using the standard amortizing payment formula P = L × i ÷ (1 − (1 + i)−n), with a semi-annually compounded 6.29% converted to a monthly periodic rate and n = 300 months for a 25-year amortization, the monthly qualifying payment on $695,925 is approximately $4,560. The payment actually charged, at 4.29%, is approximately $3,760.

Step 5 — ratios. Add estimated heat of $100 per month and property tax of $450 per month to the qualifying payment: $5,110. At a 39% GDS limit that requires roughly $157,000 of qualifying annual income before any other debt is counted. Add a $500 car payment and the TDS test at 44% requires roughly $153,000 — so on this file the GDS test binds first.

Assumptions. 25-year amortization, semi-annual compounding, no condo fees, no other debt beyond the car payment, taxes and heat as stated, and full qualifying income. Change any one of these and the required income moves.

Illustrative only. Figures are examples, not an offer, quote, or approval.

The policy rate is not your mortgage rate

The Bank of Canada sets a target for the overnight rate. That target moves prime, and prime moves variable mortgages and HELOCs. It does not set fixed mortgage rates, which are priced against Government of Canada bond yields and each lender's funding costs and margin. This is why fixed rates sometimes move in a week with no announcement in it, and sometimes do not move at all on decision day.

What the policy rate does and does not control
RatePrimary driverEffect of a policy-rate change
Variable mortgage rateLender prime, which tracks the policy rateMoves, usually within days of the announcement
HELOC rateLender prime plus a spreadMoves with prime
Fixed mortgage rateGovernment of Canada bond yields and funding costsNo direct link; often moves ahead of decisions, on expectations
Minimum qualifying rateYour contract rate plus two, floored at 5.25%Moves only if your contract rate moves
What the policy rate does and does not control

Policy rate 2.25% as observed 2026-07-29; published prime 4.45% on the same observation date. Remaining scheduled announcements: September 16, 2026, October 28, 2026, December 9, 2026. See the decision record.

Where these numbers vary — and where they do not

Fixed versus variable elements of Canadian mortgage qualification
ElementHow much it variesWhat that means for you
Qualifying rate formulaDoes not vary between federally regulated lendersShopping lenders will not remove the test. Only a lower contract rate or a smaller loan moves it.
Down payment minimums and insurance availabilityDoes not vary — set by the national insured-mortgage frameworkThe $1.5M insurance boundary is absolute, whatever a lender suggests.
Debt-service ratio limitsVaries on uninsured lendingA decline at one lender's ratio limit is not a decline everywhere.
Credit score minimumsVaries by lender and programThere is no single national minimum score for a mortgage.
Acceptable down payment sourcesVaries by lender and insurerGifted funds, borrowed funds, crypto proceeds and foreign funds are treated very differently across the market.
Statement history requiredVaries, though 90 days is the common requestAssume 90 days and be pleased if less is asked.
Rate-hold lengthVaries, commonly 90 to 120 daysConfirm the expiry date in writing; it is a lender term, not a rule.
Fixed versus variable elements of Canadian mortgage qualification

Failure modes and recovery

Common qualification failures and the action that fixes each
What went wrongUnderlying testRecovery action
Approved amount lower than expectedQualifying rate, not contract rate, drives the payment used in the ratiosRe-run the numbers at contract plus two, then adjust price, down payment or amortization.
Ratios fail by a small marginGDS or TDS limitClear or consolidate a small revolving balance — monthly obligations weigh heavily in TDS.
Price crosses $1.5MDefault insurance unavailable at or above that priceEither fund 20% down or reset the target price below the boundary.
Down payment questionedSource-of-funds verification, not balanceProduce 90 days of statements per account and a signed gift letter where applicable.
Rate hold expires before closingLender term, typically 90–120 daysAsk for an extension in writing before expiry, or re-underwrite at current pricing.
Common qualification failures and the action that fixes each

How we calculated this

Values verified 2026-07-31 against the primary sources listed on the evidence desk. Regulatory thresholds come from the federal regulator's guidance, insurance rules from default insurer program documentation, tax limits from the Canada Revenue Agency, and rate observations from the Bank of Canada's published series. Worked examples use the assumptions stated with each example and are illustrative, not an offer, quote or approval.

Full methodology and source review policy
Cite this page

Publisher: mortgagepreapproval.ca

URL: https://mortgagepreapproval.ca/canadian-mortgage-qualification-snapshot

Last reviewed: 2026-07-31

mortgagepreapproval.ca. "Canadian Mortgage Qualification Snapshot: The Numbers That Decide Your File." Last reviewed 2026-07-31. https://mortgagepreapproval.ca/canadian-mortgage-qualification-snapshot

Written and reviewed by the Canadian Mortgage Compass Editorial Desk. This page is general information for Canadian readers and is not mortgage, legal, tax, or financial advice, and not an offer of credit. Rules, rates, and lender policies change; confirm your own situation with a licensed mortgage professional in your province. Editorial policy · Corrections