Mortgage Qualification FAQs
The qualification mechanics Canadian lenders actually use: GDS and TDS debt-service ratios, the OSFI Minimum Qualifying Rate (MQR), how self-employed income is weighted, and why two households with the same income can qualify for different mortgage amounts.
8 FAQs in this category.
What are the exact credit score requirements by lender tier?
A-lenders (Big 5 banks, credit unions): 680+ Beacon score for prime rates, 720+ for best available rates.
What is the exact timeline after bankruptcy or consumer proposal?
Discharged bankruptcy: A-lenders typically require 2+ years post-discharge with 2 re-established credit accounts active for 12+ months.
Which credit rebuilding actions have the highest impact?
Ranked by impact: (1) Payment history — 35% of score, never miss any payment, set up auto-pay.
How long do negative items stay on a Canadian credit report?
Varies by province: Late payments: 6 years from date of last activity.
How are GDS and TDS ratios calculated for mortgage qualification?
GDS (Gross Debt Service) covers housing costs divided by gross income — lenders cap it at 39%. TDS (Total Debt Service) adds all other debts — capped at 44%. Your mortgage size is limited to whichever ratio is hit first.
How does rental income affect my mortgage qualification in Canada?
Rental income from an existing or subject property can offset your mortgage costs and improve your TDS ratio — but lenders apply a haircut (typically 50-80% of gross rent) and require 2 years of rental history for existing properties.
What is the OSFI mortgage stress test and how does it affect what I can borrow?
The OSFI B-20 stress test requires all federally regulated lenders to qualify you at the higher of your contract rate + 2%, or 5.25% — whichever is greater. This typically reduces your maximum borrowing by 15-20% compared to qualifying at your actual contract rate.
How does variable income — bonuses, commissions, overtime — affect my mortgage qualification?
Lenders typically use a 2-year average of variable income components (bonuses, commissions, overtime) from your T4s and NOAs. The key is demonstrating consistency — a one-time bonus doesn't help much, but 2 years of regular commissions usually qualifies at 80-100% of the average.