Applying for a mortgage in Canada involves several steps — from reviewing your finances and gathering documents, through pre-approval, to final approval and closing. Understanding the full process helps you move quickly when you find a home and avoid costly surprises.
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. A score of 680+ qualifies you for the best rates at major banks. 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: Your GDS (gross debt service) ratio should not exceed 39%, and your TDS (total debt service) ratio should not 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% for homes under $500,000, scaling to 10% on the portion between $500,000–$999,999, and 20% for homes $1 million+. A 20%+ down payment avoids CMHC mortgage 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 for 60–120 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
| Document | Notes |
|---|---|
| Government photo ID | Passport, driver’s licence, PR card |
| T4 slips | Last 2 years |
| Notices of Assessment (NOA) | Last 2 years from CRA |
| Recent pay stubs | Last 30–90 days |
| Employment letter | On company letterhead, signed |
| Bank statements | 90-day history for down payment |
| Gift letter | Required if any down payment is a gift |
| Investment/RRSP statements | If using for down payment |
| Existing property documents | If you own other real estate |
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: Survive the Stress Test
All federally regulated lenders in Canada apply the mortgage stress test. You must qualify at your contract rate plus 2%, or the Bank of Canada benchmark rate (5.25%), whichever is higher.
| Contract Rate | Qualifying Rate |
|---|---|
| 4.00% | 6.00% |
| 4.50% | 6.50% |
| 5.00% | 7.00% |
| 5.50% | 7.50% |
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 (required in most Canadian provinces). 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 our closing cost guide for province-by-province estimates.
Working with a Mortgage Broker vs. Bank
| Factor | Mortgage Broker | Direct to Bank |
|---|---|---|
| Lenders accessed | Multiple lenders | One institution |
| Rate comparison | Yes — can shop | No — one offer |
| Cost | Usually free (paid by lender) | Free |
| Specialty products | Often better access | Standard products |
| Relationship | New each time | Existing customer |
A broker is especially valuable if your situation is complex — self-employed, new to Canada, less-than-perfect credit, or buying a non-standard property.
Key Takeaways
- Start with your credit score and income documentation before approaching lenders
- Get pre-approved before house hunting — it protects your rate and gives sellers confidence
- The mortgage stress test reduces your maximum qualifying amount by roughly 20%
- Final mortgage approval typically takes 5–10 business days once you have an accepted offer
- Work with a mortgage broker if you want to compare rates from multiple lenders
Related: Mortgage Pre-Approval Guide · Documents Needed for a Mortgage · Mortgage Stress Test Explained · Home Buying Process Hub