It’s a New Day… and a New Mortgage Application

Diane Buchanan • June 15, 2016

Every time you apply for a new mortgage, your application has to stand on its own merit. Just because you were approved for a mortgage in the past doesn’t guarantee you will be approved for a mortgage in the future. Every application is its own thing! It doesn’t matter if you have have been a homeowner for 20 years with an impeccable repayment history or you are saving a down payment for your first home, we all start fresh.

So it’s always a good idea to start with or review the basics!

Mortgage financing, to the lender, is all about managing risk. In order to secure financing you will have to prove yourself as a “good risk.” To do this, lenders will scrutinize the following four areas of your mortgage application: your employment, credit history, down payment, and the property itself.

Employment

When you apply for a mortgage you are asking to borrow money, in most cases, a lot of it. The first question the lender will ask is, how can you afford to pay them back. They want to be sure that you have the ability to repay their money, with interest. And they don’t just take your word for it. Of course you believe you are good for the money… they need proof. You will be required to provide documentation that outlines your current employment status, and depending on that status, you might have to further support your income by proving a two-year history of earnings.

The stronger your employment history, the stronger your application.

Credit History

After assessing your ability to repay the mortgage by looking at how much money you make, the next best way to determine if you will make your mortgage payment on time is by looking at how you have managed other loans. Your credit report is a history of how you manage your financial obligations. It is a detailed account of every time you have agreed to borrow money, and your track record of following through. All this information is brought together inside a machine and you get what is called a credit score, which is a three-digit number between 300 and 900.

The higher your score, the stronger your application.

Downpayment

After assessing your ability to repay the money, and your past history of doing so in a timely manner, the lender wants to see that you have some “skin in the game.” Gone are the days of 100% financing, where you could get a mortgage with no money down. A 5% downpayment is the absolute minimum, where 10% is going to give the lender a lot more confidence in your ability to save money, while putting down 20% will bring you into a conventional mortgage where you don’t have to take our CMHC insurance. Typically, lenders want to see that you have accumulated your downpayment through savings, however there are other options to source your downpayment.

The more money you have to put down, the stronger your application.

Property

Most people either don’t realize or forget that the property itself is part of the mortgage application. The property is what the lender is holding as collateral in case you default on your mortgage. So if you don’t pay your mortgage as agreed, and they are forced to repossess your property and liquidate it in order to recuperate their money, they want to be sure that the property is in good shape. This is why writing a purchase agreement without a condition of financing is a bad idea. You could be the most solid applicant in Canada, but if the property isn’t a good risk, the lender won’t issue a mortgage.

There you have it. A lender will agree to give you a mortgage only when it is satisfied that:
you have an ability to repay the mortgage
you have the history to show you will repay the mortgage
you have some skin in the game
you want to buy a solid property…

The good thing about working with a Dominion Lending Centres mortgage professional is that you don’t have to approach any lender alone. We present your financial information to the lender on your behalf, and negotiate with the lender directly to ensure you get the best mortgage product available

 

This article originally appeared in the June 2016 Dominion Lending Centres Newsletter. 

DIANE BUCHANAN
 Mortgage Broker

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What Mortgage Lenders Need to Know About Your Down Payment Source

By Diane Buchanan • November 4, 2026
Why the Source of Your Down Payment Matters More Than You Think When buying a home, most people focus on how much they need for a down payment. What often gets overlooked is that where the down payment comes from matters just as much to the lender . The source of your down payment affects approval, risk assessment, and how your mortgage is structured. Here’s why lenders care—and what you need to know. 1. Anti–Money Laundering Requirements Lenders aren’t just being cautious—they’re legally required to verify the source of your down payment. To comply with anti–money laundering regulations, lenders must document where every dollar of the down payment came from on every purchase. Acceptable Down Payment Sources Down payments can come from: Your own savings or investments Borrowed funds through an insured program (such as FlexDown) A gift from an immediate family member How You Prove the Source Personal savings: You’ll need bank statements showing the funds have been in your account for at least 90 days , or proof they were accumulated through payroll deposits or other acceptable sources. Borrowed funds: Any borrowed portion must be included in your debt service ratios , since you’re responsible for repayment. Gifted funds: A signed gift letter is required confirming the money is a true gift with no repayment obligation , along with proof the funds were deposited into your account. 2. Financial Suitability and Risk The source of your down payment also tells the lender a lot about your financial habits. Down payments coming from your own savings demonstrate: Positive cash flow The ability to save consistently Strong financial management This reassures lenders that you’re more likely to keep up with mortgage payments. If the down payment is borrowed or gifted, lenders may look more closely at the rest of your application to ensure the mortgage remains affordable. Why a Larger Down Payment Helps From a lender’s perspective, more equity equals lower risk. The more money you have invested in the property, the less likely you are to walk away from the mortgage. This reduces the lender’s exposure and can sometimes result in better terms. 3. Down Payment and Loan-to-Value (LTV) Your down payment directly establishes your loan-to-value ratio (LTV)—the percentage of the property’s value being financed. In Canada: Lenders can finance up to 95% of a property’s value The buyer must contribute at least 5% as a down payment Example: On a $400,000 purchase: Maximum mortgage = $380,000 Minimum down payment = $20,000 How the Source Affects LTV Property value must be genuine and independently supported. Lenders rely on appraisals and comparable sales—not artificial price inflation. If: The seller provides money back The buyer doesn’t bring the full down payment independently Funds move “behind the scenes” …the lender considers this a change to the LTV and may decline the mortgage. All financial details of the purchase must be fully disclosed. Non-disclosure is mortgage fraud , and lenders will not proceed if the numbers don’t align. Final Thoughts Lenders ask for detailed documentation about your down payment source for good reason—it affects legality, risk, and the structure of your mortgage. Understanding these rules upfront helps avoid delays, declined applications, and last-minute surprises. If you’d like to review your down payment options or talk through mortgage financing, feel free to connect anytime. I’d be happy to walk you through the process and help you plan with confidence.

Bank of Canada Raises Rate to 2.5% — October 28, 2026

By Diane Buchanan • October 28, 2026
On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.