If your down payment is less than 20% of the purchase price, you are required to purchase mortgage default insurance, commonly called CMHC insurance (though Sagen and Canada Guaranty also offer it). The premium is a percentage of your mortgage amount, and it varies by how much you put down.

The premium is added directly to your mortgage balance. For example, on a $500,000 home with 5% down ($25,000), your mortgage would be $475,000. The CMHC premium at 4.00% is $19,000, bringing your total insured mortgage to $494,000. You can review the full schedule on the CMHC mortgage insurance premiums page.

Before approving your mortgage, every federally regulated lender in Canada must confirm you can afford payments at a qualifying rate that is higher than your actual contract rate. Under OSFI's B-20 guideline, you must qualify at the greater of your contract rate plus 2% or a minimum floor rate of 5.25%. For instance, if your lender offers you a rate of 4.5%, you would need to prove you can handle payments at 6.5%. This stress test applies to purchases, renewals with a new lender, and refinances.

The amortization period is the total length of time it takes to pay off your mortgage in full. In Canada, insured mortgages (less than 20% down) allow amortization up to 25 years. If you put 20% or more down, you can choose up to 30 years. A shorter amortization means higher monthly payments, but you pay significantly less interest over the life of the loan. Extending from 25 to 30 years lowers your monthly payment but can add tens of thousands of dollars in total interest cost. Choose the shortest amortization your budget can comfortably handle.