MORTGAGE GUIDE

Your Guide to Canadian Mortgages

Everything you need to understand mortgage payments, first-time buyer programs, and the Canadian home financing process, so you can buy with confidence.

CALCULATE YOUR PAYMENTS

Mortgage Calculator

Loading calculator...

FIRST-TIME BUYERS

Programs & Tips for New Buyers

Canada has some excellent programs to help first-time buyers. Here are the ones you should know about.

First Home Savings Account (FHSA)

Save up to $8,000/year (lifetime max $40,000) in a tax-free account specifically for your first home. Contributions are tax-deductible and withdrawals for a home purchase are tax-free.

RRSP Home Buyers’ Plan

Withdraw up to $60,000 from your RRSP tax-free for a down payment. You have 15 years to repay it, starting the second year after withdrawal.

First-Time Home Buyer Incentive

The federal government offers a shared-equity mortgage of 5–10% of the purchase price to reduce your monthly payments. Eligibility and repayment terms apply.

Ontario Land Transfer Tax Rebate

First-time buyers in Ontario can receive a rebate of up to $4,000 on the provincial land transfer tax, which can offset a significant closing cost.

Get Pre-Approved Early

A mortgage pre-approval locks in a rate for 90–120 days and shows sellers you’re serious. It also helps you understand exactly what you can afford before you start looking.

Budget Beyond the Mortgage

Remember to account for property tax, home insurance, utilities, maintenance (budget ~1% of home value/year), and closing costs (typically 1.5–4% of purchase price).

UNDERSTANDING YOUR OPTIONS

Mortgage Types

Fixed vs. Variable Rate

A fixed rate stays the same for your entire term, giving you predictable payments. A variable rate fluctuates with the Bank of Canada’s prime rate — it can save you money when rates drop but costs more when they rise.

Open vs. Closed

An open mortgage lets you pay it off anytime without penalty, but comes with a higher rate. A closed mortgage has lower rates but charges a penalty for early payoff or extra payments beyond your prepayment privileges.

Term vs. Amortization

Your term (typically 1–5 years) is how long your current rate and conditions last. Your amortization (typically 25–30 years) is how long it would take to pay off the entire mortgage. At the end of each term, you renew.

DOWN PAYMENT

Canadian Down Payment Requirements

Under $500,000

5% of purchase price

e.g. $25,000 on a $500K home

$500,000 – $999,999

5% on the first $500K + 10% on the remainder

e.g. $50,000 on a $750K home

$1,000,000+

20% of purchase price

e.g. $200,000 on a $1M home

If your down payment is less than 20%, you'll need CMHC mortgage default insurance, which is added to your mortgage balance. The premium ranges from 2.8% to 4% of the mortgage amount depending on your down payment size.

GETTING PRE-APPROVED

Why Pre-Approval Matters

What Lenders Look At

Your income, employment history, credit score, existing debts, and the property itself. They’ll calculate your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.

Pre-Approval vs. Pre-Qualification

Pre-qualification is an estimate. Pre-approval is a commitment from the lender at a specific rate, subject to finding a suitable property. Always get a full pre-approval.

How Long It Lasts

A typical pre-approval is valid for 90–120 days. If rates drop during that period, you may be able to get the lower rate. If rates rise, your locked rate is protected.

Competitive Advantage

In a competitive market like Waterloo Region, a pre-approval letter tells sellers you’re a serious, qualified buyer. It can make the difference when multiple offers come in.

KEY TERMS

Mortgage Glossary

Amortization+

The total number of years it will take to pay off your mortgage in full. Most common in Canada is 25 years, though 30-year amortizations are available with 20%+ down.

Term+

The length of your current mortgage contract (usually 1–5 years). At the end of each term, you renew your mortgage, potentially at a different rate.

Principal+

The amount of money you actually borrowed. Each payment covers some principal and some interest. Over time, more of each payment goes toward principal.

Equity+

The portion of your home you actually own — the difference between your home’s value and what you owe. Equity grows as you pay down your mortgage and as your home appreciates.

Closing Costs+

Fees due when you finalize your purchase: land transfer tax, legal fees, title insurance, home inspection, and adjustments. Budget 1.5–4% of the purchase price.

Stress Test+

To qualify for a mortgage in Canada, you must prove you can afford payments at the higher of your contract rate + 2% or 5.25%. This protects you if rates rise.

CMHC Insurance+

If your down payment is less than 20%, you must pay mortgage default insurance (through CMHC, Sagen, or Canada Guaranty). The premium is added to your mortgage balance.

Portability+

Some mortgages let you transfer your existing mortgage to a new property without penalty. Useful if you sell and buy within your current term.

GET STARTED

Need a Mortgage Broker Recommendation?

Julian works with trusted local mortgage brokers in the Waterloo Region who can shop the market for you and often secure better rates than your home branch.

Reach Out to Julian →

The calculator and information on this page are for educational purposes only and use the standard Canadian mortgage formula with semi-annual compounding. Your actual rate and payment will depend on your lender and financial situation. Always consult directly with a mortgage broker or your bank for a fully accurate qualification.