What is a mortgage and how can you get one?

A mortgage is a long-term loan provided by a bank or other financial institution for the purchase of real estate. It is a financial tool that allows buyers to purchase a home without having to pay the full cost up front. In Canada, mortgages typically have terms ranging from 25 to 30 years and include various conditions and interest rates depending on the type of product chosen.

The main essence of a mortgage is that the property serves as collateral for the loan. This means that if the borrower is unable to meet their payment obligations, the lender has the right to take possession of the property to cover the debt. This mechanism reduces the risk for lenders and allows them to offer relatively low interest rates compared to other types of loans.

Types of mortgage loans in Calgary

Fixed interest rate

A fixed-rate mortgage provides stability in payments throughout the term of the agreement. With this type of loan, the interest rate and monthly payments remain the same, which makes it easier to plan your budget. Five-year fixed mortgages are the most popular type in Calgary and across Canada because they offer a balance between stability and flexibility.

According to Ratehub.ca, 70% of mortgages in Alberta in 2021 were five-year fixed mortgages. Current rates for five-year fixed mortgages in Calgary are around 4.04%.

Variable interest rate

A variable-rate mortgage is tied to the TD prime rate and can change over the life of the loan. When the base rate changes, the portion of the payment that goes toward paying down the principal may increase or decrease. This type of mortgage can be beneficial if interest rates are falling, but carries the risk of higher payments if rates rise.

Insured and uninsured mortgages

Insured mortgages are required for buyers who make less than a 20% down payment. These loans must be insured through CMHC, Sagen, or Canada Guaranty to protect the lender in the event of default. The insurance premium ranges from 2.80% to 4.00% of the mortgage amount.

Uninsured or conventional mortgages are available to those who can make a down payment of 20% or more. These loans do not require mortgage insurance, which saves buyers money, but they usually have slightly higher interest rates.

Requirements for obtaining a mortgage

Credit rating

The minimum credit score requirements depend on the type of mortgage. For conventional mortgages (with a down payment of 20% or more), most lenders require a minimum credit score of 680. For insured mortgages, you can qualify with a score of 600, but better terms are available with a score of 680 or higher.

A credit score of 680 or higher is considered good and gives you access to the best interest rates. Buyers with lower scores can still get a mortgage, but they'll pay higher interest rates and insurance premiums.

Income and debt ratios

Lenders use two key metrics to assess borrowers' creditworthiness:

  • Gross debt service ratio (GDS) must not exceed 39% of gross monthly income. This includes mortgage payments, property taxes, heating costs, and 50% of condo fees (if applicable).
  • Total debt service ratio (TDS) should not exceed 44% of gross income. It includes all housing expenses plus other debts such as car payments, credit cards, and other loans.

Down payment

The minimum down payment requirements in Calgary are in line with federal standards:

  • 5% for homes valued at up to $500,000
  • 5% for the first $500,000 plus 10% for amounts over $500,000 (up to $1.5 million)
  • 20% for homes valued at over $1.5 million

Based on average prices in Calgary, the approximate down payments are:

Type of housing Average price Approximate down payment
Single-family homes $804,811 ≈ $55,481
Townhouses $465,418 ≈ $23,271
Apartments/condos $353,805 ≈ $17,690

The mortgage process in Calgary

Pre-approval

Pre-approval is a critical step before you start looking for a home. This process allows you to determine the maximum loan amount you can qualify for and locks in an interest rate for 120 days. In Calgary's fast-paced market, pre-approval demonstrates the buyer's seriousness and can be a deciding factor in accepting an offer.

The following documents are required for pre-approval:

  • Pay stubs for the last 2-3 months
  • T4 forms for the past year
  • Bank statements confirming savings for the down payment
  • For self-employed individuals: 2-3 years of business assessment notices
  • Letter of gift if family is helping financially

Mortgage stress test

All buyers must pass the federal mortgage stress test. This test checks whether you can afford your mortgage at higher interest rates. The minimum qualifying rate is 5.25% or your contract rate + 2%, whichever is higher.

For example, if your contract rate is 4%, you must qualify at a rate of 6% (4% + 2%) or 5.25%, whichever is higher. This test applies to all mortgages through federally regulated lenders, regardless of the size of the down payment.

Choosing between a bank and a mortgage broker

Advantages of working with a mortgage broker:

  • Access to more mortgage options
  • Ability to get reduced rates through volume agreements
  • Personalized service and expert advice
  • Legal obligation to work in the client's best interest

Advantages of working directly with a bank:

  • Established relationships can help with negotiations
  • Direct contact with the lender
  • No broker fees

Required documents

To apply for a mortgage, you need to gather five main categories of documents:

1. Proof of identity

  • Government-issued photo ID
  • Documents proving your residential address

2. Proof of income

  • Last 2-3 pay stubs
  • T1 form for the previous year
  • Assessment notices for the last two years
  • T4/T4A forms
  • Letter of employment on company letterhead

3. Financial information

  • Bank statements for the last 90 days
  • Investment accounts and assets
  • Information about existing debts and obligations
  • Blank check for automatic payments

4. Real estate information

  • Purchase agreement with all attachments
  • MLS listing or property information sheet
  • Current mortgage statement (for refinancing)

5. Legal information

  • Information about your lawyer/notary
  • Appraisal agreement
  • Signed confidentiality agreement

Programs for first-time buyers

Federal Programs

  • Home Buyers' Plan — allows you to withdraw up to $60,000 from your RRSP tax-free to purchase your first home. The funds must be repaid over 15 years, beginning in the second year after withdrawal.
  • First-Time Home Savers Account (FHSA) — allows you to contribute up to $8,000 per year (maximum $40,000) tax-free. Both contributions and withdrawals for the purchase of a first home are tax-free.
  • Home Buyers' Tax Credit — provides up to $1,500 to eligible buyers.

Provincial and local programs

  • Attainable Homes Calgary offers $2,000 in down payment assistance and homes at below-market prices. The program has income limits:

  • $103,000 for families

  • $93,000 for couples without children

  • $83,000 for individuals

Mortgages in Calgary: key information and tips

First Place Program in Edmonton

The First Place Program in Edmonton provides a five-year deferral of land costs for eligible properties.

30-year amortization

Starting December 2024, first-time buyers and those purchasing new homes can choose amortization of up to 30 years. This lowers monthly payments but increases the total cost of the mortgage due to additional interest.

Current market in Calgary

According to TD Bank, the average home price in Calgary as of November 2023 was just over $557,000, which is below the national average.

This makes Calgary one of Canada's most affordable large cities to buy a home.

Current mortgage rates in Calgary (August 2025)

  • 5-year fixed: 4.04%
  • 3-year fixed: 3.99%
  • 5-year variable: prime rate minus 0.40% (4.55%)

The Calgary market is characterized by an increase in real estate supply compared to previous years, giving buyers more time to make decisions. However, pre-approval is still important for budgeting and negotiating power.

Features for newcomers

Special mortgage programs are available for Ukrainian newcomers and other immigrants in Calgary. Some lenders offer:

  • Lower credit history requirements for newcomers
  • Acceptance of alternative forms of income verification
  • Special programs for professionals with foreign qualifications

Recommendations for newcomers:

  • Start building your Canadian credit history as early as possible
  • Keep all documents related to your income and assets from your country of origin
  • Consult with mortgage specialists who have experience working with immigrants

Mortgage-related expenses

In addition to the basic mortgage payments, buyers should consider additional expenses:

  • CMHC mortgage insurance (for down payments less than 20%): 2.80%-4.00% of the mortgage amount

  • Appraisal fee: typically $300-500, paid by the lender

  • Legal fees: $800-1,500 to close the deal

  • Home inspection: $400-600 for a detailed inspection

  • Home insurance: required for mortgage approval, average cost $2,374 per year

Tips for getting a mortgage

  1. Prepare in advance — start gathering documents and improving your credit score at least 6 months before you plan to buy.

  2. Compare offers — get quotes from several lenders or use the services of a mortgage broker to choose the best option.

  3. Consider all costs — don't forget about additional payments such as property taxes, insurance, utilities, and maintenance.

  4. Be realistic — don't spend the maximum amount you qualify for; leave yourself a financial buffer.

  5. Stay flexible — consider open mortgage options or early repayment options for future financial freedom.

Conclusion

Getting a mortgage in Calgary requires careful planning and understanding of the local market, but with the right approach and professional support, the process can be successful and help you realize your dream of home ownership.