3 Canadian Mortgage Myths Stopping You From Buying Sooner

If you're holding off on buying because you think you need 20% down, because your credit isn't perfect, or because you're waiting for rates to drop, you're not alone. Those three come up more than anything else, and all three are worth a second look.

Myth One: You Need 20% Down

The minimum down payment in Canada is 5%, and anywhere from 5% up to 19.99% is workable. Those funds can come from savings, a gift, long-term investments, or borrowed money, whether that's a line of credit or your RRSPs.

Where lenders aren't flexible: crypto, money coming from overseas, funds from sanctioned countries, or gifts from someone who isn't immediate family. Father, mother, sister, brother, that's the list. Anything outside that circle, and most banks will struggle to confirm the source.

Put down less than 20%, and you'll pay default insurance, added on top of your mortgage and paid over the life of the loan. That's the real reason some people push to save the full 20%. But don't let that stop you from getting into the market. Getting in matters more than avoiding an insurance premium. You can offset that cost later with accelerated payments, basically one extra monthly payment a year, or lump sum payments directly against the principal. Both speed up how fast you pay off the mortgage.

Myth Two: You Need Perfect Credit

Let's be honest. If you're buying your first home, your credit is probably not sitting anywhere near 900. You're likely in the 600 to 700 range, and that's fine. Banks are looking for a pattern. Missed payments, judgments against you, and whether you've shown you can handle daily credit obligations like credit cards, lines of credit, or auto loans while also carrying a mortgage payment.

A score below 680, and some lenders will deny you outright. But there are exceptions. We can sometimes still get a deal approved on the bank side, even with less than 20% down and a score in the low 600s, especially with a strong co-borrower who has good credit and stable income. You need to be making your payments on time. A one-off blemish, a missed auto-withdrawal, a forgotten bill while you were traveling- lenders understand that. What raises red flags is a pattern: multiple missed payments back-to-back on the same credit card or line of credit.

Building credit before you apply? Have a few different trade lines. If you've only got a Visa, look at adding a Mastercard; it's a different brand, and it helps your file. Keep your utilization down too. Once your balance climbs above 50% of your total limit, your score starts dropping because that's read as high utilization. And always, always pay on time.

Myth Three: You Need to Wait for Rates to Drop

Nobody has a crystal ball. Not me, not the banks, not the economists on TV. Rates move because of bond yields, the Bank of Canada, global events, things happening on the other side of the world that ripple into what you pay on your mortgage. Trying to time it is a guessing game.

The longer you wait to get into the market, the more expensive things tend to get, based on past history. If you're holding out for rates to fall back to the 1 to 2% range we saw during the pandemic, you'll be waiting a very long time. My honest read is that rates stay somewhere in the 3 to 4% mark for a while yet. That's not a guarantee.

Get a pre-approval in place. That way, when the right house comes up, you're ready to move on it.

I cover all three of these myths in full in the video.

What This Means for Your Timeline

If you've been holding off because you think you need 20% down, or because your credit isn't flawless, or because you're waiting for rates to drop to pandemic levels, none of those are good reasons to sit still.

The move that actually protects you is getting a proper read on your file now. That's what our mortgage services are built around: figuring out where you stand and what's actually possible.

If you want to know exactly where you'd land today, whether that's your down payment sourcing, your credit situation, or your rate outlook, get in touch and we'll set up a pre-approval so you're ready to move when the right property shows up.

Talk it through with a broker

Every file is different, and the right answer depends on your income, your timeline, and which lenders will actually work with your situation. If you want a straight read on where you stand, book a mortgage review, and we will go through it together.

Linden Crain is a licensed mortgage broker (FSRA #M22004731) with Dominion Lending Centres, Elite Mortgage Group, serving Windsor-Essex and Ontario. This article is general information, not personalized financial advice. Mortgage products, rates, and qualification rules change and vary by lender and by applicant.