Mortgage Affordability

Marci • April 24, 2017

Genworth Canada is the largest private residential mortgage insurance company in Canada. They have an excellent education website over at homeownership.ca. Recently, Genworth published an article discussing the recent changes to mortgage rules and how they impact affordability, here it is for your reading pleasure.

Canada’s new mortgage rules: Will they affect affordability?

In late 2016, Canada’s new mortgage rules – aimed at promoting responsible homeownership – were introduced by the federal government. Although the changes included measures geared toward curbing foreign real estate speculation and others specific to low loan-to-value mortgages, let’s focus on the change most likely to affect affordability for you, a first-time homebuyer purchasing with less than 20% down: the interest rate stress test.

The affordability of Homeownership has been helped in recent years by low interest rates and the availability of high loan-to-value mortgages backed by mortgage insurance. But what would happen if those interest rates were to jump? Concerned by that scenario, the government introduced tougher interest rate stress-test criteria in fall 2016, with the aim at preparing perspective homebuyers for a future rise in interest rates.

What does that mean for you? More likely than not, less money to work with. Here’s why.

Implications of the stress test

Lenders and mortgage insurers look at two debt service ratios when qualifying you for a mortgage and mortgage insurance.

Gross debt service (GDS)

The carrying costs of your home, such as mortgage payments, taxes, heating, etc., relative to your income.

Total debt service (TDS)

Your home carrying costs (mortgage payments, taxes, heating, etc.) plus your debt payments (credit cards, student loans, car loans, etc.), again relative to your income.To qualify for mortgage insurance, the highest allowable GDS ratio is 39% and the highest allowable TDS ratio is 44%.

While you may qualify for a fantastic five-year fixed mortgage rate from your bank (2.94%, for example), the new rules use the Bank of Canada’s five-year fixed mortgage rate (4.64% in late 2016, for example) to determine whether you can afford your mortgage payments.

This tougher affordability standard acts as a buffer to test whether or not you could still afford your mortgage if interest rates were to rise dramatically.

RESULT: The new rules mean you can afford less house for your income – approximately a 20% to 30% reduction in the mortgage amount you qualify for.

What can you do?

Canada’s new mortgage rules, while the subject of much debate, are here to stay. But the good news is, working within them is possible! You may have to revise your plans or timelines, but first-time homebuyers can still get into the real estate market.

Get yourself on track to buy your first home by laying the groundwork for responsible homeownership: reduce your consumer debt, save for a larger down payment, and boost your overall financial fitness.

This article was originally published on homewonership.ca here. 

If you want to have a look at your personal financial situation, please contact me anytime, let’s figure out how much mortgage you qualify for! 

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Deposit vs. Down Payment: Key Differences for Homebuyers

By Marci Deane • July 29, 2026
When you’re buying a home, two terms often cause confusion: deposit and down payment . While they’re related, they serve very different purposes in the homebuying process. Here’s what you need to know. What Is a Deposit? A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing. How it works : Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded. Connection to your down payment : Once the sale is finalized, your deposit becomes part of your total down payment. Why it matters : The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit. What Is a Down Payment? Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage. Minimum requirement : In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance. Sources : Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds. Example: How They Work Together Imagine you’re buying a $400,000 home with a 10% down payment ($40,000). When you make your offer, you provide a $10,000 deposit . Once conditions are met, that deposit is transferred to your lawyer’s trust account. At closing, you add the remaining $30,000 to complete your full down payment. The lender provides the rest—$360,000—through your mortgage. The Bottom Line Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home. 📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.

RRSP Home Buyers’ Plan Explained: A Smart Way to Buy Your First Home

By Marci Deane • July 22, 2026
Saving for a down payment is one of the biggest challenges first-time buyers face. What many don’t realize is that the Canadian government offers a program designed to make it easier—the Home Buyers’ Plan (HBP) . This program allows you to withdraw money from your RRSP to help purchase your first home, without immediate tax consequences. Here’s how it works: Who Qualifies? To be eligible, you generally need to be a first-time home buyer. In practical terms, this means you must not have owned a home in the past four years, nor lived in a property owned by your spouse or partner during that time. There are also special allowances if you’re living with a disability or helping a relative with a disability. In these cases, you can use the HBP even if you’ve owned a home more recently. How Much Can You Withdraw? Under the program, you can access up to $35,000 from your RRSP as an individual. Couples can combine their withdrawals for a total of $70,000 . These funds must have been in your RRSP for at least 90 days before you take them out. Paying It Back The HBP isn’t “free money”—it’s an interest-free loan from your own retirement savings. You’ll have 15 years to repay the full amount back into your RRSP, starting in the second year after withdrawal. Each year, the CRA will send you an HBP Statement of Account outlining how much needs to be repaid. If you don’t make your repayment in a given year, that amount will be added to your taxable income. Why It’s a Smart Strategy The HBP can give first-time buyers a powerful boost toward homeownership. It helps you put together a larger down payment, which can reduce your mortgage amount and monthly payments. Just remember: it’s important to balance the short-term benefit of homeownership with the long-term impact on your retirement savings. Next Steps Thinking about using the Home Buyers’ Plan? Let’s sit down and review whether it’s the right move for you. Together, we can create a strategy that gets you into your first home while keeping your future financial goals on track. 📞 Reach out anytime—it would be a pleasure to guide you through the process.

Bank of Canada Holds Rate at 2.25% — July 15, 2026

By Marci Deane • July 15, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The tone of today's announcement is notably more optimistic than previous months. Here's what's changed and what it means for you.