Mortgage terms and rules you should know when buying a home

#House and home

Get up to speed on mortgage basics before buying a home



The mortgage basics

Down payment requirements


  • Purchase price of $500,000 - $999,999 needs a 5% minimum down payment on the first $500,000, and 10% on any amount over $500,000

If you make a down payment of at least 20% of the purchase price, you’ll hold a conventional or low-ratio mortgage. If you put down less than 20%, your mortgage is considered a high-ratio mortgage. By law, high-ratio mortgages require you to buy mortgage default insurance.

Mortgage default insurance


Financial stability requirements



Recent changes to borrowing

Changes to mortgage stress test requirements

What is it? Effective Jan. 1, 2018, the Department of Finance revised its stress-testing requirements for all homebuyers requiring a mortgage. With these changes, all homebuyers needing a mortgage must qualify for the greater of their lender’s contractual rate plus an additional 2%, or the Bank of Canada’s 5-year conventional mortgage rate to get a mortgage. For example, if your lenders qualifying contract rate is 2.89%, and the Bank of Canada’s rate is 4.99%, you’d need to be approved at 4.99%.

Who’s it for? All homebuyers that require a mortgage, regardless of their down payment amount.

How does it affect me? These changes intend to help Canadians avoid taking on bigger mortgages than they can afford. While the amount of money needed to pay for a mortgage hasn’t changed, it’s now harder to qualify for a mortgage to begin with. This could mean some individuals no longer qualify for a mortgage at all, while others will qualify for a smaller mortgage amount.


How much mortgage default insurance costs




For B.C. residents only: British Columbia Home Owner Mortgage and Equity (HOME) Partnership program

What is it? Starting February 15, 2017, the Government of British Columbia introduced a new program to assist eligible first-time home buyers in British Columbia to enter the housing market.

Who’s it for? First-time homebuyers who are Canadian citizens or permanent residents and have lived in British Columbia for at least one year.1

How does it affect me? The British Columbia HOME Partnership program matches a qualified first-time homebuyer’s down payment with a repayable loan of up to 5% of the purchase price (maximum purchase price of $750,000). The program will run for three years, ending March 31, 2020. For full program information, visit the B.C. Housing websiteOpens a new website in a new window.


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The takeaway

With housing price fluctuations and changing mortgage rules, it can be overwhelming to navigate the housing market. If you need a little help to get started, your financial security advisor can assess your financial security plan to make sure you’re on track towards your home ownership goals.

Your advisor can also put you in touch with a mortgage planning specialist who can guide you through each step of the mortgage process. Regardless of where you are in your home buying journeyOpens in a new window, brushing up on mortgage basics and current rules is a good place to start when thinking about your next move.


1For full eligibility requirements, visit "BC Housing"Opens a new website in a new window

While reasonable efforts have been made to ensure the accuracy of the information provided, some errors or omissions may occur. This information is provided for awareness purposes only. For current details, please speak with a Mortgage Planning Specialist.


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