How to Qualify for a Conventional Mortgage in Canada

Having 20% available for a down payment does not, by itself, qualify you for a conventional mortgage. It gets the mortgage within the conventional loan-to-value range, but the lender still has to decide whether your income, debts, credit and overall finances support the loan. To qualify for a conventional mortgage in Canada, you generally need enough equity to keep the mortgage at 80% of the property’s lending value or less. You must also meet the lender’s credit and income requirements, demonstrate that you can afford the mortgage and, at federally regulated lenders, pass the applicable mortgage stress test.

Start With Enough Down Payment for a Conventional Mortgage

A conventional mortgage is a mortgage of no more than 80% of the property’s lending value. For a typical purchase where the purchase price corresponds with the lending value, that means putting at least 20% down.

For example, buying a $600,000 home with $120,000 down leaves a $480,000 mortgage and an 80% loan-to-value ratio. The mortgage is within the conventional range.

The exact calculation is covered in more detail under conventional mortgage down payment requirements in Canada. Having the required down payment establishes the mortgage’s LTV category. It does not guarantee that a lender will approve the application.

Your Income Has to Support the Mortgage

Lenders examine your income because they need to determine whether you can reasonably carry the proposed housing costs.

Expect to provide evidence rather than simply state what you earn. During the mortgage preapproval process, lenders may request identification, proof of employment, evidence of your salary or hourly rate, information about your assets and debts, and proof that you can cover the down payment and closing costs. Self-employed applicants may be asked for Canada Revenue Agency notices of assessment from the previous two years.

Income stability and the documentation a particular lender accepts can vary. There is therefore no universal salary that automatically qualifies someone for a conventional mortgage. The required income depends partly on the mortgage amount and the other financial obligations included in the lender’s assessment.

Your Debt Ratios Affect How Much You Can Qualify For

Income is considered alongside your expenses and existing debt.

One measure is the gross debt service ratio, or GDS. It compares qualifying housing costs with gross household income. Housing costs generally include the mortgage payment, property taxes, heating costs and 50% of applicable condominium fees. Federal mortgage qualification guidelines indicate that total monthly housing costs generally should not exceed 39% of gross household income.

The total debt service ratio, or TDS, adds other debt obligations. These can include credit card payments, car loans, lines of credit, student loans and child or spousal support. Total debt load generally should not exceed 44% of gross income.

These figures are useful qualification benchmarks, but they should not be treated as a promise of approval. Lenders assess applications under their own lending policies and may consider the broader risk presented by an application.

You Need to Pass the Mortgage Stress Test

For most newly underwritten uninsured mortgages at federally regulated lenders, qualifying is based on a higher interest rate than the contractual rate you will actually pay.

As of September 2026, the minimum qualifying rate for uninsured mortgages is the greater of 5.25% or your mortgage contract rate plus 2 percentage points.

Suppose your lender offers a mortgage rate of 4.50%. Adding two percentage points produces a qualifying rate of 6.50%, which is higher than the 5.25% floor. Your ability to carry the mortgage would therefore be assessed using 6.50% for the stress-test calculation.

Passing the stress test does not mean your contractual interest rate becomes 6.50%. It means your finances must demonstrate sufficient capacity at the higher qualifying rate.

Your Credit History Still Matters

There is no single nationwide credit score that guarantees approval for every conventional mortgage. Lenders set their own lending guidelines and evaluate credit as part of the application.

A potential lender will review your credit report before approving a mortgage. Poor credit can affect the lender’s decision even when your income and down payment appear sufficient.

Checking your credit reports before applying gives you an opportunity to identify errors and understand what a lender will see. Avoid treating a particular credit-score number found online as a universal conventional-mortgage cutoff unless the lender you are applying to actually uses that requirement.

Your Existing Debts Can Reduce Your Borrowing Capacity

A car loan or credit card balance does not automatically prevent you from qualifying, but the required payments can reduce how much additional debt your income can support.

This happens through the TDS calculation. More of your gross income committed to existing obligations leaves less room for the proposed housing costs within the lender’s affordability assessment.

Paying down debt before applying can therefore improve the numbers in some cases, but the effect depends on the debt, its required payment and the rest of your finances. The relevant figure is not simply your total debt balance. Lenders consider the obligations that feed into their qualification calculations.

Be Ready to Prove Where Your Money Is Coming From

The lender may ask for recent statements from bank or investment accounts to confirm that you actually have the funds needed for the purchase. Proof of the down payment is part of the documentation commonly requested during preapproval.

You should also have money available for expenses outside the down payment. Legal fees, applicable land transfer taxes, adjustments and other mortgage closing costs in Canada can require additional cash when the purchase is completed.

Keeping these funds distinct in your planning is important. A buyer who has exactly enough cash for a 20% down payment may still need additional money to close the transaction.

The Property Must Also Be Acceptable to the Lender

Mortgage qualification is not solely about the borrower. The lender also evaluates the property securing the loan.

A preapproval therefore does not guarantee final mortgage approval. Once you have a specific property, the lender may need to verify that it meets its standards, and the approved mortgage amount can depend on the property’s value.

This is particularly important when making an offer based on a preapproved amount. Preapproval tells you what a lender may be prepared to lend based on the information assessed at that stage. It does not turn a later purchase into an automatically approved mortgage.

What to Have Ready Before You Apply

A conventional mortgage application is stronger when the lender can verify the important parts of your finances without unresolved gaps. Have your identification, income and employment documents, information about existing debts and assets, and evidence of your down-payment funds ready.

You can also estimate affordability before approaching a lender by reviewing how your housing expenses and debts compare with your gross income. If you meet the lender’s requirements, you can then compare the available conventional mortgage rates in Canada rather than focusing only on whether you qualify.

Meeting these basic requirements still does not create an entitlement to a mortgage. Different lenders can make different decisions on the same borrower because their underwriting policies, products and risk tolerances are not identical.

Questions About Qualifying for a Conventional Mortgage

Can you qualify for a conventional mortgage with exactly 20% down?

Potentially. If the resulting mortgage is no more than 80% of the property’s lending value, it can fall within the conventional category. You still need to satisfy the lender’s other qualification requirements.

Does mortgage preapproval mean you have qualified for the final mortgage?

No. A preapproval does not guarantee final approval. The lender can still assess the property and verify information before agreeing to fund the mortgage.

Can you qualify for a conventional mortgage with other debts?

You can have other debts and still qualify. Their required payments are considered as part of your overall debt load, so substantial obligations can reduce the mortgage amount your income can support.

Do conventional mortgages have to pass the stress test?

Most newly underwritten uninsured mortgages from federally regulated lenders are subject to the minimum qualifying rate. The current test uses the greater of the mortgage contract rate plus 2 percentage points or 5.25%.