How to Qualify for a Mortgage in Canada: A Step-by-Step Guide 

Buying a home is one of the biggest financial decisions you’ll make — and qualifying for a mortgage is a crucial first step. Understanding how mortgage qualification works in Canada can make the process smoother and increase your chances of approval. At Inbudget Mortgage, we’re here to guide you every step of the way.

Step 1: Understand Your Credit Score and Financial Health

Your credit score plays a significant role in mortgage qualification. Lenders use it to assess your creditworthiness and the risk of lending to you.

• Check your credit report: Get a free copy from Equifax or TransUnion.

• Aim for a good score: Generally, a score above 680 improves your chances.

• Fix errors: Dispute any inaccuracies on your report before applying.

• Manage debt: Pay down credit cards and loans to improve your debt-to-income ratio.

  Step 2: Calculate Your Debt-to-Income Ratio(DTI)

  Lenders evaluate your ability to repay by comparing your monthly debts to your income.

  • Gross Debt Service (GDS): Should not exceed 32% of your gross income.

  • Total Debt Service (TDS): Should stay below 40-44%, including all debts and mortgage payments.

  Use a mortgage calculator to estimate what you can afford.

  Step 3: Save for a Down Payment

  In Canada, the minimum down payment depends on your home’s price:

  • Up to $500,000: 5% minimum

  • $500,000 to $999,999: 5% on first $500,000 + 10% on remaining amount

  • $1 million and above: 20% minimum

  A larger down payment may lower your mortgage insurance premiums and interest rates.

Step 4: Gather Necessary Documentation

Prepare the following documents to streamline your application:

• Proof of income (pay stubs, tax returns)

• Employment verification

• Proof of assets (bank statements, investments)

• Details of existing debts and monthly expenses

• Identification documents

Step 5: Get Pre-Approved for a Mortgage

A pre-approval gives you a conditional commitment from a lender based on your financial profile.

• Shows sellers you’re serious

• Helps define your budget

• Locks in interest rates (usually for 60-120 days)

At Inbudget Mortgage, we offer fast, free pre-approvals with competitive rates.

Step 6: Choose the Right Mortgage Product

Options include fixed-rate, variable-rate, open, and closed mortgages. Each has pros and cons depending on your financial goals.

Our brokers help you select the best product tailored to your needs.

Step 7: Apply and Close Your Mortgage

Submit your full application with your chosen lender. The process includes:

• Property appraisal

• Final credit and income verification

• Legal paperwork and closing details

Why Work with Inbudget Mortgage?

Navigating mortgage qualification can be complex. Our licensed mortgage experts simplify the process, helping you:

• Understand your options

• Improve your financial readiness

• Secure the best possible terms