A Canadian mortgage is a loan secured by your home that you repay over an amortization period, usually 25 or 30 years, through a series of shorter terms. You put down at least 5% to 20% depending on price, pass a stress test, and renew your rate every few years until the loan is paid off.
Key takeaways
- Your term is the length of your rate contract; your amortization is the total payoff time.
- With less than 20% down, you need mortgage default insurance, and the price must be under $1.5 million.
- Every buyer must qualify at the higher of their rate plus 2% or 5.25%.
- Most Canadians renew several times before the mortgage is fully paid.
Term vs amortization: the key difference
This is the part that confuses most first-time buyers. Canadian mortgages have two separate time periods.
- Amortization is how long it would take to pay off the whole loan, often 25 or 30 years.
- Term is how long your current rate and conditions last, commonly 1 to 5 years.
When your term ends, you renew with your lender or switch to a new one. Your rate and payment can change at each renewal. That’s different from the US, where 30-year fixed loans are common.
How much do you need for a down payment?
Canada’s minimum down payment depends on the purchase price. As of September 2026, the rules are:
| Purchase price | Minimum down payment | Example |
|---|---|---|
| Up to $500,000 | 5% | $500,000 home: $25,000 |
| $500,000 to $1,499,999 | 5% on first $500,000 + 10% on the rest | $800,000 home: $55,000 |
| $1,500,000 and up | 20% | $1,600,000 home: $320,000 |
So a $1,000,000 bungalow needs at least $75,000 down. You’ll also need closing costs on top, typically 1.5% to 4% of the price.
What is mortgage default insurance?
If you put down less than 20%, your mortgage must be insured by CMHC, Sagen or Canada Guaranty. The insurance protects the lender, not you, but it’s what lets lenders offer low down payments.
The premium ranges from roughly 0.6% to 4.5% of the mortgage, depending on your down payment. At 5% to 9.99% down, the common rate is 4.0%. It’s usually added to your mortgage balance rather than paid upfront. Insured mortgages are only available on homes priced under $1.5 million.
Amortization limits
Insured mortgages are normally capped at 25 years. First-time buyers and anyone buying a newly built home can get 30 years, with a small premium surcharge. With 20% or more down, most lenders offer up to 30 years.
How the mortgage stress test works
To get approved, you must show you could afford payments at a higher rate. You qualify at the greater of your contract rate plus 2%, or 5.25%.
With typical 5-year fixed rates in the mid-4% range as of September 2026, that means qualifying near 6.5%. The stress test caps how much you can borrow, so it’s the number to know before you shop. If you’re renewing and simply switching lenders without changing the loan, you no longer need to re-pass it.
Fixed vs variable rates in brief
A fixed rate stays the same for your whole term. A variable rate moves with your lender’s prime rate, which follows the Bank of Canada. As of September 2026, the Bank of Canada’s policy rate is 2.25% and prime is about 4.45%. For a full comparison, read our fixed vs variable mortgage guide.
What affects the mortgage rate you’re offered?
Two buyers can walk into the same lender on the same day and get different rates. Lenders price each file based on risk and cost. The biggest factors are:
- Insured vs uninsured. Insured mortgages often get the sharpest rates because the lender’s risk is covered.
- Your credit history. Strong, clean credit opens the door to A lenders and their best pricing.
- Term length and type. Fixed and variable, short and long terms are all priced differently.
- Property use. Rentals and homes with a basement unit can be priced differently from owner-occupied homes.
- Prepayment features. Cheaper “low-frills” products often come with tighter prepayment rules and bigger penalties.
Always compare the full package, not just the rate. A slightly higher rate with flexible prepayment and portability can save money if your plans change.
The mortgage process, step by step
- Get pre-approved. A lender or mortgage agent reviews your income, debts and credit and gives you a maximum price and a rate hold.
- Shop within your budget. Set up listing alerts for new bungalows in your price range.
- Make an offer. Most buyers include a financing condition, often around five business days.
- Get full approval. The lender reviews the property, may order an appraisal and confirms your documents.
- Close with your lawyer. Your real estate lawyer registers the mortgage, collects closing costs and hands you the keys.
Bungalow tip: Lenders look at the property too. Older bungalows with outdated wiring or an unpermitted basement apartment can trigger extra questions. Share the listing with your mortgage agent before you offer.
Want the vocabulary in one place? Our mortgage terms glossary explains every word you’ll hear.
Frequently asked questions
What is the minimum down payment in Canada?
It’s 5% on the first $500,000 and 10% on the portion from $500,000 to $1,499,999. Homes at $1.5 million or more need 20% down.
How long is a typical mortgage term in Canada?
Five years is the most popular term, but terms from one to ten years are available. When the term ends, you renew or switch lenders.
Can I get a 30-year mortgage in Canada?
Yes, if you’re a first-time buyer, you’re buying a new build, or you have 20% or more down. Other insured buyers are limited to 25 years.
Do I need a mortgage agent or can I go to my bank?
Either works. A licensed mortgage agent can compare many lenders, while your bank offers only its own products. Comparing both is a smart move.
The bottom line
Canadian mortgages make more sense once you separate the term from the amortization and know the down payment and stress test rules. Run your numbers with our mortgage calculators, then talk to a licensed mortgage agent for advice tailored to your situation.
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