Quick answer
Mortgage qualification depends on income, debts, credit, down payment, property details, and current lender and insurer rules. Consumer proposals and bankruptcies are formal legal processes that can only be administered by a Licensed Insolvency Trustee in Canada.
- Treat affordability calculators as estimates, not pre-approvals.
- Compare housing costs beyond the mortgage payment.
- Speak with a Licensed Insolvency Trustee before deciding on a formal insolvency option.
Mortgage and down-payment basics
A mortgage is credit secured by real property. Minimum down-payment and mortgage-insurance rules depend on purchase price, property, occupancy, borrower, lender, and insurer requirements.
- For an eligible home priced at $500,000 or less, the minimum down payment is generally 5%.
- For an eligible home over $500,000 and under $1.5 million, it is generally 5% of the first $500,000 plus 10% of the portion above $500,000.
- For a home priced at $1.5 million or more, the minimum down payment is generally 20%.
Mortgage loan insurance
For many eligible purchases with less than 20% down, mortgage loan insurance is required. CMHC is one provider; other approved insurers also operate in Canada. The insurance protects the lender, while the borrower normally pays the premium.
When debt is unmanageable
A consumer proposal and bankruptcy are formal insolvency proceedings under federal law. Only a Licensed Insolvency Trustee can administer them.
Consumer proposal
A consumer proposal is a legally binding offer to creditors, administered by a Licensed Insolvency Trustee. It may change the amount repaid, extend repayment, or both. A consumer proposal can last no more than five years.
Bankruptcy
Bankruptcy is a legal process for an insolvent person. Duties, costs, asset treatment, surplus-income obligations, duration, discharge, and excluded debts depend on the case and applicable law.
Official sources
Financial rules and programs change. These primary sources should be used to confirm current requirements.