Common Mortgage Questions Answered: Down Payment & Rates

Get expert answers to common mortgage questions in Canada. Learn about down payment requirements, how interest rates are determined, and CMHC insurance costs.

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Common Mortgage Questions Answered: Down Payment & Rates

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Thinking about buying a home or investment property? You probably have a million questions running through your head. Let’s tackle the most common mortgage questions that come up again and again, with straight answers that actually make sense.

Can You Tell Me What Interest Rate I’ll Get?

Here’s the thing – nobody can give you an accurate rate without doing a full pre-approval first. And anyone who does is probably setting you up for disappointment.

Think of it like calling your dentist and asking how much it’ll cost to fix your teeth without letting them look in your mouth. They need to see what they’re working with before giving you a real number.

What Affects Your Rate

Several things determine your final interest rate:

Your credit score – Different lenders have different requirements and may offer better rates at certain score levels
Your down payment – Put more down, get a better rate. It’s that simple
Your debt-to-income ratio – How much you already owe compared to what you make matters a lot

The real problem is brokers who quote attractive rates over the phone just to get your business, then deliver much higher rates when your approval comes through. Any rate quoted without a pre-approval is just a guess, not a promise. Understanding the difference between A lenders vs B lenders for your next investment deal also helps you set realistic rate expectations.

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How Much Do I Need For a Down Payment?

Canada gives you some great options here. The minimum is 5%, but there’s a catch with the recent rule changes.

You can put down 5% on the first $500,000 of your purchase price. For anything between $500,000 and $1,500,000, you need 10% down on that portion. The maximum purchase price for insured mortgages is $1.5 million (updated December 2024).

Here’s an example: buying an $800,000 home? You need 5% of the first $500,000 (that’s $25,000) plus 10% of the remaining $300,000 (that’s $30,000). Total down payment: $55,000.

Property Type Makes a Difference

Owner-occupied homes (1-2 units) – Minimum 5% down
Owner-occupied triplex or fourplex – Minimum 5% down (same sliding scale: 5% on first $500K, 10% on remainder)
Full rental properties – Minimum 20% down

If you are buying an $800,000 property and wondering whether the 5%/10% sliding scale or a full 20% down makes more financial sense, book a free strategy call with LendCity and we will run both scenarios for you.

What’s This CMHC Thing Everyone Talks About?

CMHC stands for Canada Mortgage and Housing Corporation. They make it possible for you to buy a home with less than 20% down.

Here’s how it works: when you put down less than 20%, CMHC insures your mortgage. This protects the lender if you can’t pay, which means they’re willing to lend to you with a smaller down payment.

The catch? You pay a fee for this insurance. The good news is you don’t pay it upfront – it gets added to your mortgage amount. The bad news is you’ll pay interest on it for years.

How Much Does CMHC Cost?

The fee depends on your down payment size. At 5% down, you’re looking at about 4% of your mortgage amount in insurance fees.

Example: $400,000 mortgage with 5% down means roughly $16,000 in CMHC fees added to your mortgage. Your new mortgage amount becomes $416,000.

This is why putting down 10% instead of 5% saves you money – the insurance premium drops with every 5% you add to your down payment.

By the way, CMHC isn’t the only game in town. Sagen and Canada Guaranty do the same thing. They all follow similar rules, though CMHC usually leads the pack on policy changes.

How Do I Find a Good Realtor?

Finding a realtor isn’t about finding the most experienced person – it’s about finding someone you click with.

Sure, ask friends and family for recommendations. But here’s the problem: your social circle probably only knows one or two realtors. And just because your mom loves her realtor doesn’t mean you will.

Try asking your Canadian mortgage brokerage for recommendations instead. They work with dozens of realtors and can match you based on your personality, communication style, and what you’re looking for.

Getting along with your realtor makes the whole home buying process so much easier. You’re making one of the biggest financial decisions of your life – you want someone you trust and actually enjoy talking to.

If you are not sure whether your credit score, debt-to-income ratio, and down payment will get you A-lender rates, book a free strategy call with us for a straight answer before you start shopping.

Should I Buy From the Listing Agent?

Short answer: no, not if you can avoid it.

Here’s why – the listing agent was hired by the seller to get them the highest possible price. That’s literally their job. When they try to represent you too, there’s a built-in conflict of interest.

When you have your own buyer’s agent, they fight for the best price for YOU. The listing agent fights for the seller. They negotiate and meet somewhere in the middle. That’s fair.

When you work directly with the listing agent, who’s fighting to get you a lower price? Nobody. They’re motivated to close at their client’s preferred price, and their client is the seller, not you.

The only exceptions? If you personally know and trust the realtor, or if they have a rock-solid reputation for ethical practice. But even then, proceed carefully.

How Can I Avoid Bidding Wars?

Bidding wars are stressful and expensive. Here are two strategies that actually work.

Strategy 1: Make a Preemptive Offer

See a newly listed home you love? Your realtor can submit an offer before the official offer presentation date. Some sellers will accept to avoid the uncertainty of waiting, especially if your offer is strong.

Pro tip: write a personal letter about yourself and your family explaining why you love the house. This emotional connection can set your offer apart from just being about numbers.

Strategy 2: Target Properties Listed For Several Weeks

This is the secret weapon. When a property sits on the market for weeks while similar homes sell in days, sellers get worried. They start thinking something’s wrong with their house or their pricing.

That worry works in your favor. They become much more receptive to reasonable offers, even slightly below asking price.

Why do properties sit longer? Usually it’s not because something’s wrong with the house. It’s usually:

Poor photography that makes the home look bad
Weak marketing – just listing on MLS and doing nothing else
Bad timing or poor listing presentation

You can find excellent properties that were simply marketed poorly. And you’ll often be the only offer, which means no bidding war at all.

Just use common sense – ask your realtor what the property is actually worth. Make a fair offer based on market value, and you’ll have a great shot at getting it accepted.

What’s a Notice of Assessment and How Do I Get It?

Your Notice of Assessment (NOA) is what the Canada Revenue Agency sends you after you file your taxes. It’s basically a summary showing your income, taxes paid, and whether you’re getting a refund or owe money.

Lenders want to see it for two reasons: to make sure you don’t owe CRA money, and to verify the income you’re claiming on your mortgage application matches what you told the government.

Getting Your NOA Quickly

The fastest way is online. Log into your CRA My Account portal – you can use your bank login credentials to access it. Download your NOA right away.

Or call CRA and they’ll mail you a copy, but that takes longer.

Here’s a pro tip: get your NOA now, before you need it. Don’t wait until you’ve already bought a property and you’re rushing to get mortgage approval. Having it ready makes everything smoother.

How Do I Fix or Improve My Credit?

The first and most important step is getting your own credit report from Equifax. Most Canadian lenders use Equifax, so that’s the one that matters most.

Once you have it, look carefully for accounts that don’t belong to you. This happens more often than you’d think – people with similar names get their information mixed up, or there could be fraud.

Here’s a real example: someone with the same name as their father had his dad’s prepaid cell phone show up on their credit report, even though they had different birthdays and lived in different places. Just the shared name caused the mix-up.

If you find something that isn’t yours, you can dispute it directly with Equifax. Getting errors removed can give your Credit Score a quick boost. Learn more about how to build and improve your credit score fast.

Check your credit report at least once a year, and definitely before you start looking for a mortgage. It’s free, it’s easy, and it could save you from surprises when you apply.

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Frequently Asked Questions

Can I get an accurate mortgage rate quote over the phone?

No, you can't get an accurate rate without completing a full pre-approval first. Your rate depends on your credit score, down payment amount, and debt-to-income ratio. Any rate quoted without reviewing your complete financial picture is just a guess, not a guarantee.

How much down payment do I need to buy a home in Canada?

The minimum is 5% on the first $500,000 of the purchase price, and 10% on any amount between $500,000 and $1,500,000 (the insured mortgage ceiling was raised to $1.5M in December 2024). For investment properties where you won't live, you need at least 20% down. For an owner-occupied triplex or fourplex, the same 5%/10% sliding scale applies.

What is CMHC and do I have to pay for it?

CMHC is Canada Mortgage and Housing Corporation, which provides insurance on mortgages with less than 20% down. You do pay a fee, but it's added to your mortgage amount rather than paid upfront. With 5% down, the fee is about 4% of your mortgage amount. Putting down more reduces this fee.

Should I buy a home directly from the listing agent?

It's best to avoid this if possible. The listing agent works for the seller and is paid to get them the highest price. When you have your own buyer's agent, someone is actually fighting to get you the best deal. Without your own agent, nobody is advocating for your interests.

How can I avoid getting into bidding wars?

Two strategies work well: submit a preemptive offer before the official offer date with a personal letter about why you love the home, or target properties that have been listed for several weeks. Properties sitting longer often have motivated sellers who are more open to reasonable offers without competition.

What is a Notice of Assessment and why do lenders need it?

A Notice of Assessment is the summary document CRA sends after you file taxes. Lenders need it to confirm you don't owe CRA money and to verify that your income matches what you reported to the government. You can get it quickly by logging into your CRA My Account online.

How do I check my credit report for mortgage purposes?

Get your credit report directly from Equifax, as most Canadian mortgage lenders use Equifax. Review it carefully for any accounts that don't belong to you – errors happen more often than you'd think, including mix-ups with people who have similar names. Dispute any errors you find.

Can I put less than 20% down on an investment property?

No, investment properties where you won't be living require a minimum 20% down payment. However, if you're buying a 2-4 unit property and plan to live in one of the units, you can use the standard owner-occupied down payment rules (5% on first $500K, 10% on the remainder up to $1.5M) since it's considered owner-occupied.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

December 22, 2025

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9 min read

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