Choosing the best time to get a mortgage can make a huge difference in your approval odds and the interest rate you’ll pay. And when you’re buying your first home, timing often feels more than ever.
Timing your mortgage application is a personal decision based on your unique financial situation, and while interest rates can’t be perfectly predicted, you can optimize your chances of securing favourable terms by focusing on factors within your control like improving your credit score, saving a larger down payment, and maintaining stable employment.
For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.
The Short Answer: Timing Your Mortgage Application
Ready for the quick version? Here’s when to apply for a mortgage in Canada:
- Financial readiness: When your credit score is 680+ and your debt payments are under 40% of your income
- Down payment: When you’ve saved at least 5% (but ideally 20% to avoid CMHC insurance)
- Job situation: After 2+ years at the same job or in the same industry
- Market timing: When interest rates are stable or dropping (but don’t try to time the market perfectly)
- Pre-approval: 3-4 months before you want to buy
- Final application: After you’ve found a home and your offer is accepted
Are You Ready to Apply? Check Your Financial Health First
The best time to apply for a mortgage is when you’re financially prepared. Here’s what lenders will be examining with a magnifying glass:
Your Credit Score Matters (A Lot)
Your credit score is a big deal when applying for a mortgage. Most conventional lenders want to see a score of at least 680, though some will go as low as 640.
Here’s what different scores mean for your mortgage:
- 740+: You’ll get the best rates and terms
- 680-739: Still good for conventional mortgages
- 600-679: You might need a B-lender or pay higher rates
- Below 600: You’ll likely need an alternative lender and pay much higher rates
Want to know where you stand? Check your credit score for free through your bank’s online banking portal or through third-party services.
If your score needs work, focus on:
- Paying down credit card balances
- Making all payments on time
- Not applying for new credit
- Keeping old credit accounts open
Even a 20-point increase in your score could save you thousands in interest over your mortgage term.
Debt-to-Income Ratio: What You Owe vs. What You Earn
Lenders use two key ratios to determine how much home you can afford:
Gross Debt Service (GDS) Ratio: Your housing costs shouldn’t exceed 32% of your gross income. Housing costs include:
- Mortgage payment
- Property taxes
- Heating costs
- 50% of condo fees (if applicable)
Total Debt Service (TDS) Ratio: All your debt payments (including housing) shouldn’t exceed 40% of your gross income.
Before applying, estimate these ratios yourself. If they’re too high, focus on paying down debt or increasing your income before applying.
Job Stability: Lenders Love Boring Employment Histories
Mortgage loan lenders get nervous about job hoppers. They typically want to see:
- At least 2 years at your current job, or
- 2 years in the same industry if you’ve changed employers
If you’re self-employed, prepare for extra scrutiny. You’ll need:
- At least 2 years of tax returns (NOAs)
- Consistent or increasing income
- Business financial statements
Apply When You’ve Saved a Down Payment (More Is Better)
If you’re trying to time your mortgage application for the best interest rates, saving a higher down payment is going to help you secure favourable terms.
In Canada, your down payment options are:
- 5% minimum for homes under $500,000
- 5% on the first $500,000 and 10% on the portion above $500,000 for homes between $500,000 and $999,999
- 20% for homes $1 million and above
20% is a great goal to aim for. Why? Because with 20% down:
- You avoid CMHC mortgage default insurance (which can add $15,000+ to a $500,000 home)
- You’ll get better interest rates
- You’ll have a smaller mortgage and lower monthly payments
Average 20% down payments for a Calgary mortgage range from $20,000 to $50,000. If home prices are increasing faster than you can save, you might spend less in the long term by applying with a lower down payment. Condos typically have lower down payments, which makes them great for first-timers. Remember, time is money!
Don’t Forget About Closing Costs
Many first-time buyers focus so much on the down payment that they forget about closing costs. In Canada, expect to pay:
- Legal fees: $1,000-$2,000
- Land title transfer fee: Alberta doesn’t have a land transfer tax, but title fees still apply
- Title insurance: $250-$400
- Home inspection: $400-$600
- Appraisal fee: $300-$500
- Property tax adjustments
- Moving costs
These typically add up to 1.5%-4% of your home’s purchase price. Budget for them separately from your down payment.
Watch The Market (But Don’t Obsess)
Timing the market perfectly is nearly impossible, but being aware of market conditions can help you make better decisions.
Keep an Eye on Interest Rates
Interest rates in Canada have been a rollercoaster lately. Even a 1% difference in your mortgage rate can mean paying tens of thousands more over your mortgage term.
Keep an eye on Bank of Canada announcements, but don’t panic if rates tick up slightly. Remember:
- You can lock in a rate with a mortgage pre-approval (typically good for 90-120 days)
- Rates change, but your mortgage approval is based on a “stress test” rate anyway
The stress test means you must qualify at either your contract rate plus 2% OR the benchmark rate (whichever is higher). This provides some buffer if rates rise.
Seasonal Patterns in Canadian Real Estate
Canadian real estate follows fairly predictable seasonal patterns:
Spring (March-June):
- Most homes on the market
- Highest competition among buyers
- Typically highest prices
- Faster closing timelines due to high demand for services
Summer (July-August):
- Market slows down, especially in August
- Less competition but fewer choices
- Potential for better negotiations
Fall (September-November):
- Second-busiest season
- Good inventory with less competition than spring
- Motivated sellers who want to sell in fall and avoid winter slowdowns
- Often a sweet spot for buyers
Winter (December-February):
- Fewest homes on the market
- Least competition from other buyers
- Potentially more negotiating power
- Sellers listing in winter are often highly motivated
- Slower processing times due to holidays
Many mortgage experts suggest applying in the fall or winter. Since lenders get their business from homes being sold, they may be more flexible on terms to secure more customers when the market slows down. This can get you more favourable mortgage offers.
Bonus Tip: Best Time of Month to Apply for a Mortgage
Want to stack every advantage you can for your mortgage application? Pay attention to the monthly mortgage lending business pattern:
Beginning of the month: lenders are trying to get as many mortgage applications as possible. They may be more receptive to your expectations and needs.
Middle of the month: generally, they’re gathering required documents for existing customers to get loans ready for final approval.
End of the month: crunch time. Lenders are rushing to tie up loose ends and close on mortgages. They may have less time to consider your application.
Get Professional Help (Seriously, It’s Worth It)
Most Canadians work with professionals when getting a mortgage, and for good reason.
Mortgage Broker vs. Bank: The Great Debate
You have two main options for getting a mortgage:
Mortgage Broker:
- Works with multiple lenders
- Can shop around for the best rates
- Especially helpful if you have credit issues or are self-employed
- Their service is free (they’re paid by the lender)
Bank:
- Only offers their own mortgage products
- Might have a relationship with you already
- Sometimes offers better rates to existing customers
- Might have more flexible terms for certain professionals
About 40% of Canadian mortgages now go through brokers, with first-time buyers using them most often.
Get Pre-Approved (It’s Not What You Think)
Mortgage pre-approval isn’t just a nice-to-have—it’s essential in today’s market. Pre-approval and pre-qualification are often used interchangeably, but here’s what many people don’t realize:
A pre-approval:
- Locks in an interest rate (usually for 90-120 days)
- Gives you a maximum borrowing amount
- Makes your offers more attractive to sellers
- Doesn’t guarantee final approval
Even with a pre-approval, the lender will look at the specific property you want to buy before giving final approval.
Get pre-approved 3-4 months before you plan to buy. This gives you time to house-hunt with confidence while your rate hold is still valid.
The Application Process: Preparation Is Key
Once you’re ready to apply, being organized makes everything smoother.
Documents You’ll Need (Start Collecting Now)
Canadian mortgage lenders typically ask for:
- Government-issued ID
- Proof of income:
- T4 slips and Notice of Assessments for the past 2 years
- Recent pay stubs (last 30 days)
- Letter of employment confirming your position, salary, and length of employment
- Proof of down payment:
- 90 days of bank statements showing your savings history
- Gift letter (if receiving money from family)
- Sale agreement (if using money from selling another property)
- Details about other assets and liabilities:
- Investment statements
- Other property information
- Credit card and loan statements
Having these ready before you apply can speed up the process considerably.
Don’t Make These Financial Moves During Application
Once you’ve applied for a mortgage, lenders hate surprises. Avoid:
- Taking on new debt
- Changing jobs
- Making large purchases
- Moving large amounts of money between accounts without explanation
- Applying for new credit (even store credit cards)
- Going on a spending spree
Any of these can delay approval or even cause a lender to decline your application after initially approving it.
For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.
Mortgage Bottom Line: When Should YOU Apply?
The perfect time to apply for a mortgage is different for everyone, but generally:
- Apply for pre-approval when:
- Your finances are in order
- Your credit score is as good as it’s going to get
- You’re seriously ready to start house hunting
- Interest rates seem stable or are dropping
- You can confidently say you’ll be buying within the next 3-4 months
- Submit your final application when:
- You have a signed purchase agreement for a specific property
- Your financial situation hasn’t changed since pre-approval
- You’ve gathered all necessary documentation
Remember that buying a home is a marathon, not a sprint. Taking time to prepare financially before applying for a mortgage will give you more options and potentially save you thousands of dollars over the life of your loan.
Frequently Asked Questions
How long does mortgage approval take in Canada?
Mortgage pre-approval typically takes 1-3 business days. Final approval after you’ve found a property usually takes 5-7 business days, though it can take longer during busy seasons or with complex applications.
Can I get a mortgage with a credit score below 680?
Yes, but you’ll have fewer options and higher interest rates. Scores between 600-679 might require going to a B-lender or paying higher rates with traditional lenders. Below 600, you’ll likely need an alternative lender and might pay 2-4% higher interest rates.
How long is a mortgage pre-approval valid?
Most Canadian mortgage pre-approvals are valid for 90-120 days and include a rate hold for that period. If interest rates go down during your pre-approval period, most lenders will honor the lower rate.
Should I wait for interest rates to go down before applying?
Trying to perfectly time interest rates is risky. If you’re ready to buy and current rates work for your budget, don’t delay. You can always refinance if rates drop significantly later. Remember, homes in many Canadian markets appreciate over time, potentially offsetting higher interest costs.
Can I switch lenders after getting pre-approved?
Absolutely. Pre-approval doesn’t commit you to a lender. You’re free to go with any lender when you’re ready for final approval. This gives you flexibility to find the best rate and terms when you actually purchase.
