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The total gross verifiable earnings of all applicants on the mortgage application before income taxes and personal deductions. In Canada, lenders verify salaried income via recent pay stubs and CRA Notices of Assessment (NOA), while commission or self-employed income is typically assessed using a multi-year average.

The mutually agreed transaction price for the real estate property specified in the Agreement of Purchase and Sale. In Canadian lending, the mortgage is calculated on the lower of the purchase price or the formal property appraisal value.

The combined monthly shelter commitment required for mortgage debt service, including scheduled principal paydown, interest charges, municipal property tax installments, heating expenses, and applicable condo maintenance fees.

The contract rate is the actual annual interest rate negotiated with your mortgage lender. Under federal guidelines set by the Office of the Superintendent of Financial Institutions (OSFI), all federally regulated mortgage applicants must qualify at the Qualifying Rate—the higher of the contract rate plus 2.00% or the federal benchmark floor of 5.25%.

The total number of years over which a mortgage is scheduled to be completely repaid. In Canada, 25-year amortizations are standard. Under current federal mortgage regulations, 30-year amortizations are permitted on all uninsured mortgages (with 20% or greater down payment), as well as on insured mortgages for all first-time homebuyers and all purchasers of newly constructed homes.

Monthly maintenance charges paid to a condominium corporation to fund common elements, building insurance, exterior repairs, and the reserve fund. When underwriting Canadian mortgages, lenders are mandated to include 50% of the monthly condo fee into the borrower’s Gross and Total Debt Service ratios.

Unencumbered liquid assets available in bank accounts, registered accounts (such as the First Home Savings Account or RRSP Home Buyers' Plan), or verified non-repayable gift funds from immediate family. Cash on hand must cover both the mandatory down payment and closing expenses.

Administrative expenses associated with funding a mortgage loan, including property appraisal fees, legal registration of the charge at the provincial land registry, title insurance policies, and lender processing or discharge fees.

Non-mortgage transaction expenses required to finalize a real estate acquisition on closing day. Major elements include real estate lawyer fees, provincial Land Transfer Tax (and municipal Land Transfer Tax in Toronto), title search disbursements, and moving expenses.

Purchasing newly constructed residential property from a builder involves distinct tax and financing rules. New homes are subject to Harmonized Sales Tax (HST), with eligible buyers applying for the CRA GST/HST New Housing Rebate. Resale homes in Ontario are exempt from HST on the purchase price.

An illustrative planning benchmark is to reserve 1.5% to 3.0% of the total purchase price in liquid savings to ensure legal fees, land transfer taxes, and property adjustments are fully funded on closing day without compromising emergency reserves.

Under Canadian federal regulations, mortgage default insurance is mandatory on all high-ratio mortgages where the down payment is less than 20% of the purchase price. The current maximum purchase price eligible for insured mortgage financing in Canada is $1.5 million. Homes purchased for over $1.5 million require a minimum 20% down payment and cannot be insured.

A one-time premium charged by Canadian mortgage insurers—including the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), and Canada Guaranty. The premium protects the lender against borrower default and is typically added to the mortgage principal balance. Note that provincial sales tax on the premium (8% in Ontario) cannot be added to the mortgage and must be paid in cash at closing.

Unsecured revolving consumer debts. For debt ratio underwriting, lenders calculate either the minimum contractual payment or 3% of the outstanding credit card balance as a mandatory monthly expense in your Total Debt Service ratio.

Fixed lease or financing installments on personal vehicles. Because vehicle liabilities represent contractual recurring debt, every $100 per month committed to a car payment reduces your maximum mortgage qualification capacity by approximately $15,000 to $20,000.

Additional monthly obligations including student loans, personal lines of credit (typically calculated at 3% of balance), child or spousal support orders, and installment loans that must be factored into your household debt schedule.

The two foundational underwriting benchmarks in Canadian mortgage lending:

• Gross Debt Service Ratio (GDSR): The percentage of gross monthly income required to cover housing costs (mortgage principal & interest, property taxes, heat, and 50% of condo fees). Standard reference threshold is 39%.
• Total Debt Service Ratio (TDSR): The percentage of gross monthly income needed to service housing costs plus all other personal debt payments. Standard reference threshold is 44%.

Learn more about strategic debt structures in our educational guide to evaluating mortgage debt.