How Mortgages Are Approved in Canada: the 3 Things Lenders Check
Getting approved can feel like a black box — but lenders really come back to the same three things every time. Here’s how a mortgage actually gets approved in Canada, from a Calgary mortgage broker, so you can put your strongest application forward.
What do lenders look at to approve a mortgage?
Whether you’re a first-time buyer or a seasoned homeowner, approval comes down to three pillars. Get all three in good shape and the rest of the process gets far smoother.
Income
Proof you can afford the payments — stable employment or self-employment income, with a consistent history.
Credit
Your track record of paying debts on time. Aim for a score of 650 or higher for the best options.
Down payment
Your own money in the deal. The more you put down, the lower your loan-to-value — and the more options open up.
1. Income — how you’ll pay the mortgage
Your income is the first thing a lender checks: a stable, sufficient income stream shows you can repay the loan. Regular employment or established self-employment income is preferred, and lenders weigh your employment history, the nature of your work, and how consistent your income is.
2. Credit — your other debts and obligations
Your credit report tells the lender how reliably you handle money. Aim to keep your credit score above 650 to widen your choices and earn better rates. Review your report regularly, pay every bill on time, and keep credit-card balances well under their limits — even a few late payments or a maxed-out card can move your score.
Under 650, you’re not out of options: alternative lenders can still help while you rebuild. And a nice quirk of the rules — contributing to your RRSP or TFSA doesn’t count against you; only debt payments do.
How much down payment do I need?
The minimum depends on what you’re buying and how you’ll use it. For an owner-occupied home it starts at 5%; investment and specialty properties need more. A bigger down payment lowers your loan-to-value ratio, which opens up more lenders and better pricing.
| Property type | Minimum down payment |
|---|---|
| Owner-occupied home — under $500,000 | 5% |
| Owner-occupied — $500,000 to $1.5M | 5% + 10% above $500k |
| Owner-occupied — $1.5M or more | 20% |
| Rental / investment property | 20% |
| Commercial property | 25%+ |
| Raw land | 30%+ |
With less than 20% down on a home you’ll live in, your mortgage is insured and a one-time premium is added to the loan — that’s normal, and it’s how most first-time buyers get in with 5%.
Your down payment can come from savings, a gift from an immediate family member (with a gift letter), or registered funds like the RRSP Home Buyers’ Plan and the FHSA if you’re a first-time buyer. Lenders will want to see a 90-day history of the money, so keep your paper trail clean.
What are GDS and TDS?
Once your income, credit and down payment check out, lenders size the mortgage using two debt-service ratios — the guardrails that decide how much you can borrow:
TDS (Total Debt Service) — keep under 44%. Everything in GDS plus all your other debt: car loans, credit cards, lines of credit and support payments. Whichever ratio is tighter sets your maximum mortgage.
What is the mortgage stress test?
Canada’s stress test is a mandatory check that you could still afford your payments if rates rose. Lenders qualify you at the higher of your contract rate + 2% or 5.25% — not the rate you’ll actually pay. It protects you from payment shock, and it’s the single biggest reason a pre-approval number comes in lower than people expect.
Approval isn’t about being perfect — it’s about presenting your income, credit and down payment the way lenders need to see them.
Why get approved with a Calgary mortgage broker
Instead of one bank’s answer, you get the whole market’s. We serve buyers and homeowners across Alberta — including Calgary and Edmonton — and here’s what that means for your approval:
- We shop 30+ lenders and match your income, credit and down payment to the one most likely to approve you at the best rate.
- We know which lenders are flexible on self-employed income, bruised credit, or unique properties.
- We structure the application so the ratios and stress test work in your favour — before it ever goes to a lender.
- It’s free, there’s no credit check to start, and there’s no obligation.
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Frequently asked questions
What do lenders look at to approve a mortgage?
What credit score do I need to get a mortgage in Canada?
How much income do I need to be approved?
What is the mortgage stress test?
How much down payment do I need?
Can I get approved if I’m self-employed?
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Free · No credit check to start · No obligationThis article is general information, not financial, mortgage or legal advice. Rates, rules, ratios and approvals vary by lender and by your individual situation, and are subject to change and to lender approval. Please speak with a licensed mortgage professional about your specific circumstances. Mortgages for Less with INDI Mortgage.