Question 1

What is the minimum down payment in Canada?

Accepted Answer

5% for homes up to $500,000; 5% on the first $500,000 plus 10% on the portion between $500,000 and $1.5 million; and 20% for homes over $1.5 million or any investment property. Some lenders may require a higher down payment based on your credit profile.

Question 2

How is CMHC mortgage insurance calculated?

Accepted Answer

CMHC insurance is mandatory for insured mortgages (down payment under 20% on homes under $1.5M). Current rates: 3.0% for 15–19.99% down, 3.3% for 10–14.99% down, 4.2% for 5–9.99% down. A 0.2% surcharge applies for 30-year amortizations. The premium is added directly to your mortgage principal.

Question 3

What are GDS and TDS ratios?

Accepted Answer

GDS (Gross Debt Service) = (mortgage payment + property tax + heating + 50% of condo fees) ÷ gross monthly income. TDS (Total Debt Service) adds all other monthly debt payments to the numerator. Most A lenders require GDS ≤ 39% and TDS ≤ 44%. If both ratios are within these limits, you should qualify with most prime lenders.

Question 4

What is the mortgage stress test?

Accepted Answer

The federal stress test requires lenders to qualify you at the higher of: your contracted mortgage rate + 2%, or 5.25% — whichever is greater. This buffer ensures you can still afford payments if rates rise after renewal.

Question 5

How is Canadian mortgage interest compounded?

Accepted Answer

Canadian mortgages are compounded semi-annually (twice per year) by law, unlike US mortgages which compound monthly. This results in a slightly lower effective rate than the stated rate. Your lender may compound differently, which can cause minor payment variations — this calculator uses the standard Canadian semi-annual compounding.

Question 6

What does Accelerated Bi-Weekly mean?

Accepted Answer

Regular bi-weekly takes your monthly payment × 12 ÷ 26. Accelerated bi-weekly takes your monthly payment ÷ 2 instead. Because you make 26 payments per year, this equals 13 full monthly payments — one extra per year. That extra payment goes straight to principal, typically shaving 3–5 years off a 25-year mortgage.

Question 7

What annual income should I enter?

Accepted Answer

Enter the combined gross (pre-tax) annual income of all co-applicants. This includes employment income, self-employment income (lenders typically average the last 2 years), 50% of rental income, and documented regular bonuses. Do not deduct CPP, EI, or income tax — lenders use gross figures.

Question 8

What other costs should I budget for after closing?

Accepted Answer

Beyond closing costs, set aside budget for: moving expenses ($1,000–$5,000+), immediate repairs or touch-ups, appliances if not included, utility hook-up fees, and seasonal costs like landscaping or snow removal. A good rule of thumb is to keep $5,000–$10,000 liquid after your down payment and closing costs.

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