What Lenders Actually Look for in a Mortgage Application (2026)

You have found the perfect home. Now you need the mortgage to buy it. But what exactly do lenders look for when they review your application? Understanding this helps you prepare and avoid surprises.

Last reviewed October 2026. Mortgage rules change, so confirm current details before you act. Sources are listed at the end.

The Five Areas Lenders Review

Lenders review the same five areas. Each lender sets its own limits, so the same file can get different answers from different lenders.

1. Credit Score

Your credit score is a three-digit number, usually between 300 and 900, that reflects your borrowing history. Lenders use it to assess risk.

There is no single cutoff that applies everywhere. Here is the general pattern:

• Insured mortgages (less than 20% down): CMHC requires a score of at least 600 for at least one borrower. Sagen also publishes a 600 minimum for most files.
• Lender minimums: Many mainstream lenders set their own minimum above the insurer's, commonly in the 640 to 650 range. Scores of 680 and higher open up more programs and more choice.
• Lower scores: Alternative lenders accept lower scores, with pricing that usually improves as the score climbs past 600, 640 and 680.
• Two borrowers: Insurers only need one borrower to meet the minimum. Some lenders look at the higher-income borrower and set a lower floor for the second.

These ranges are rough guides, not rules. Lenders also look past the number at your whole credit file: payment history, how many accounts you have and for how long, and whether there have been recent late payments. Collections, judgments and a current consumer proposal are treated as serious negatives by many lenders, and a past bankruptcy usually needs time and re-established credit before a mainstream lender will consider it.

What helps your score: Paying bills on time, keeping card balances well below your limits (under 30% is a common guideline), having a long credit history.

What hurts your score: Late payments, maxed-out credit cards, many recent credit applications, collections.

For more on this, see our guide to improving your credit before a mortgage application.

2. Income and Employment

Lenders need to confirm you can afford the mortgage payments. They look at:

• Employment type: Full-time salaried is simplest. Self-employed, commission, and contract workers need additional documentation.
• Job stability: How long you have been with your employer. Two years in the same field is a common benchmark, though it varies by lender.
• Income verification: Recent pay stubs, T4s, Notice of Assessment, and sometimes a letter from your employer.

Self-employed? Lenders commonly ask for two years of tax returns (T1 Generals with Statement of Business Activities). Some lenders and insurers have programs for self-employed borrowers, so the right fit depends on your file. See our self-employed mortgage guide.

3. Debt Service Ratios (GDS and TDS)

Together with your credit and income, these ratios decide how much you can borrow.

GDS (Gross Debt Service) = Housing costs ÷ Gross monthly income
Common maximum: 39%

Housing costs include: mortgage payment + property taxes + heating + 50% of condo fees (if applicable).

TDS (Total Debt Service) = (Housing costs + all other debts) ÷ Gross monthly income
Common maximum: 44%

Other debts include: car payments, student loans, credit card and line of credit payments, and any other debt that shows on your credit report. For credit cards and lines of credit, lenders usually count 3% of the balance as your monthly payment, not the statement minimum, with limited exceptions.

These are the CMHC limits for insured mortgages. Lenders set their own limits on uninsured mortgages.

Example only: on a household income of $100,000 a year, a 39% GDS limit works out to $3,250 a month for housing costs, and a 44% TDS limit works out to about $3,667 a month for all debts and housing costs combined.

Use our mortgage calculator to check your GDS and TDS ratios.

4. Down Payment and Source

Lenders verify both the amount and the source of your down payment.

How much you need: On an insured purchase, the minimum down payment is 5% of the first $500,000 of the price plus 10% of the portion above $500,000. The price must be under $1.5 million to be insured. Example only: on a $700,000 home, the minimum down payment would be $45,000. Homes at $1.5 million and over need at least 20% down.

Where it can come from:

• Savings: Bank statements, usually covering 90 days, showing where the money came from.
• Gift from family: A signed gift letter confirming no repayment is expected.
• RRSP (Home Buyers' Plan): Proof of RRSP balance and withdrawal. The withdrawal limit is currently $60,000 per person.
• FHSA (First Home Savings Account): Account statements. The FHSA allows $8,000 of participation room a year, up to a $40,000 lifetime limit.
• Sale of existing property: Agreement of purchase and sale.

Large, unexplained deposits raise questions, so keep a paper trail for the money you are using.

5. The Property Itself

The lender is lending against the property as well as to you, so it assesses the property too:

• Property type: Detached homes are simplest. Condos, rental properties, and rural properties have additional criteria. For a condo, part of the condo fees counts toward your ratios.
• Appraisal value: The lender may order an appraisal to confirm the purchase price is reasonable.
• Location: Urban properties are generally lower risk than rural.
• Condition: Major structural issues or environmental concerns can affect approval.

Amortization

On an insured mortgage, the maximum amortization is 25 years. It can go up to 30 years if at least one borrower is a first-time home buyer or the home is newly built, under CMHC's Home Start program. A longer amortization lowers the monthly payment, and it also adds 0.20% to the CMHC premium and increases the interest you pay over time.

The Stress Test

Federally regulated lenders must test your ability to pay at a higher rate than the one you are offered. You must qualify at the higher of:

• Your contract rate plus 2%, or
• 5.25%, the floor set by OSFI. CMHC uses the same rate for insured mortgages.

This is meant to check that you could still afford payments if rates rise. Qualifying at the higher rate typically reduces the most you can borrow by roughly 16 to 20% compared with qualifying at your actual rate. Example only: with a 4.5% contract rate and a 25-year amortization, the reduction is about 17%. With a 30-year amortization it is about 20%. Your result depends on your actual rate and amortization.

Renewals: Since late 2024, a straight switch at renewal does not have to be re-tested if you move from one federally regulated lender to another with no increase in the loan amount or amortization. For insured mortgages, this applies to low-ratio mortgages (80% loan-to-value or less) that are switched to a new lender at renewal, with the same remaining amortization and no equity take-out. The balance can increase by up to $3,000 to cover costs such as penalties or fees. Private lenders and some credit unions may follow different rules, so ask about your situation. See our renewal checklist for more.

Documents You Will Need

Prepare these before applying to speed up the process:

• Two pieces of government-issued ID
• Most recent pay stub
• Letter of employment (confirming position, salary, start date)
• T4 slips (last 2 years)
• Notice of Assessment (last 2 years)
• Bank statements (90 days, showing down payment)
• List of assets and liabilities

Lenders can ask for more, depending on your file.

How a Mortgage Agent Helps

Lenders weigh these areas differently. Some are more flexible on credit score but stricter on income. Others welcome self-employed borrowers but may require larger down payments. As mortgage agents, we work with many different lenders, which can help us match your profile to a lender that fits. That can save you time and may improve your chances of approval, though no one can promise an outcome.

Book a call with Holly or Cole to see which lenders may fit your file →

Sources

• OSFI: Minimum qualifying rate for uninsured mortgages
• CMHC: Purchase (minimum credit score, ratios, down payment, price limit)
• CMHC: Home Start (30-year amortization)
• Department of Finance Canada: Straight switches and portfolio insurance (December 2024)
• CRA: Home Buyers' Plan
• CRA: Make the most of your First Home Savings Account
• Financial Consumer Agency of Canada: Credit reports and scores