Financing your purchase well matters as much as choosing the right property. In 2026, the context is fairly stable: the Bank of Canada holds its policy rate at 2.25%, with the next announcement on July 15, 2026. But caution still applies: the rise in insolvencies (more than 37,000 filings in the first quarter, +8.5%) is a reminder to borrow according to your real capacity. This guide covers the key steps, from financing to down payment, including the choice between variable and fixed rates.
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1. Pre-Approval and Borrowing Capacity
First step: pre-approval. It determines your borrowing capacity and lets you lock a rate during your search. Lenders apply the stress test: you must qualify at a rate higher than your contract rate, to confirm you could absorb an increase. Also calculate your debt ratios (GDS and TDS) to know a realistic price range before viewing.
2. The Down Payment
The size of the down payment shapes the total cost and whether mortgage insurance is required. First-time buyers have dedicated tools — the FHSA and the HBP — to build that down payment in a tax-efficient way, as we detail in our guide to the FHSA and HBP for your down payment. Also keep a cushion for closing costs and unexpected expenses.
3. Fixed or Variable Rate?
The fixed rate offers predictability: the same payment for the whole term. The variable rate, tied to the policy rate (stable at 2.25%), can cost less if rates fall but exposes you to increases. The choice depends on your risk tolerance and horizon. The right reflex: compare offers from several lenders and negotiate the discount off the posted rate.
4. Term Length and Amortization
Do not confuse term (the length of the contract, often 1 to 5 years) with amortization (the total repayment period). A shorter term offers flexibility but means more frequent renewals; a longer term locks the rate for longer. A longer amortization lowers the monthly payment but increases total interest paid. The trade-off depends on your budget and plans.
5. Renewal and Refinancing
For current owners, renewal is a key moment: do not automatically sign your lender’s offer — shop around. Refinancing can serve to consolidate debt or fund projects, but should be assessed with care. In a context where insolvencies are rising (+8.5% in the first quarter), refinancing to ease a stretched budget can help — provided it does not simply postpone the problem. Professional advice is valuable here.