Mortgage Basics for Calgary Buyers

Before I became a REALTOR® I spent five years in banking, and the same few mortgage questions come up with almost every buyer I work with. This guide explains the basics in plain language, based on the federal rules from the Department of Finance, OSFI and CMHC as of November 2026. Your lender or mortgage broker makes the final call on your file, so use this to prepare, not to replace their advice.

What does a mortgage pre-approval actually do?

A pre-approval means a lender has reviewed your income, debts and credit and said you qualify for a certain amount, subject to conditions. Many lenders also hold an interest rate for a period; TD, for example, holds the rate for 120 days. Hold periods vary, so ask yours. A pre-approval is not a final approval: the lender still has to approve the actual home, and things like a job change or new debt can change the answer.

Lenders usually ask for:

• Your address and employment history (often the last 3 years)
• Proof of income such as pay stubs and an employment letter, or two years of Notices of Assessment if you are self-employed
• Statements for your savings, investments, loans, lines of credit and credit cards
• Details of any co-borrower

How does the stress test work?

Every buyer has to show they could still afford the payments if rates were higher. For insured mortgages, the Department of Finance sets the qualifying rate at the greater of your contract rate plus 2%, or 5.25%. For uninsured mortgages at federally regulated lenders, OSFI uses the same minimum qualifying rate. So if your lender offers 4.50%, you qualify as if it were 6.50%. If it offers 3.00%, you qualify at 5.25%. This is the main reason a pre-approval can come in lower than people expect.

How much of my income can go to housing?

For insured mortgages, CMHC sets two limits:

• Gross Debt Service (GDS): 39% of your gross income. This covers the mortgage payment at the qualifying rate, property taxes, heating, and 50% of condo fees.
• Total Debt Service (TDS): 44%. This adds your other debts: car loans, personal loans, lines of credit, and credit cards (counted at a payment of at least 3% of the balance).

That is why paying off a car loan or a credit card balance before you apply can raise the amount you qualify for, and why taking on a new loan before closing can put your approval at risk.

Insured vs. uninsured: what is the difference?

Insured (high-ratio) mortgages are for buyers with less than 20% down. The rules:

• The purchase price must be under $1.5 million (raised from $1 million on December 15, 2024).
• Minimum down payment: 5% of the first $500,000 and 10% of the part above $500,000.
• You, or a close family member, must live in the home.
• Maximum amortization is 25 years, or 30 years for first-time buyers and buyers of newly built homes.
• You pay a one-time insurance premium, normally added to the mortgage. CMHC’s premiums run from 0.60% of the loan with 35% or more down to 4.00% with 5% to 9.99% down (2.80% with 15% to 19.99% down, 3.10% with 10% to 14.99% down).

Uninsured (conventional) mortgages are for buyers with 20% or more down, and every home priced at $1.5 million or more needs at least 20% down. There is no insurance premium, but you still pass the stress test, and each lender sets its own rules on amortization and pricing.

What happens when my mortgage comes up for renewal?

At renewal you can stay with your lender or switch. OSFI does not expect federally regulated lenders to apply the stress test when an uninsured mortgage is moved straight to another federally regulated lender, as long as the loan amount and amortization do not increase. That makes it easier to shop around at renewal time.

Tips before you apply

• Keep your job and your credit steady from pre-approval to possession day. No new car, no new credit cards.
• Keep your down payment easy to trace. Lenders want to see where it came from, so keep your statements.
• Budget for closing costs on top of your down payment. My first-time buyer guide lists what to expect in Alberta.
• Run the numbers with my mortgage calculator, then confirm with your lender.
• Buying new? Ask about the 30-year amortization and the first-time buyer GST rebate.

Getting ready to buy? Let’s talk.

I help buyers across NE, SE, NW and SW Calgary, Airdrie, Chestermere, Balzac, Langdon, Cochrane and Okotoks, in English, Punjabi, Hindi and Urdu. Call or text me and I will help you read your pre-approval, connect you with lenders if you need one, and show you homes that fit the budget you are actually approved for.

Frequently asked questions