How mortgage underwriting works in Canada, and how to package a file that passes first time.

Every Canadian mortgage moves through the same four stages, regardless of lender:

1. 01Submission. The broker submits the completed application and supporting documents to the lender, often through a submission platform like Filogix or the lender's own portal.
2. 02Underwriter review. The lender's underwriter (or, for insured deals, the underwriter alongside the mortgage insurer) assesses credit, income, down payment, and the property against the lender's policies and OSFI Guideline B-20.
3. 03Conditions. The underwriter approves the file with a list of conditions — documents to refresh, clarifications to provide, third-party confirmations (appraisal, insurance) to land — before the deal can close.
4. 04Clear-to-close. Once every condition is satisfied and confirmed received by the lender, the file is cleared, instructions go to the lawyer, and funding is scheduled.

A file can bounce back to an earlier stage at any point — a document ages out, a condition reveals a new question — which is why broker-side packaging (covered further down) matters as much as the deal itself.

Four categories cover almost everything:

• →Credit: bureau score and history, existing debt obligations, and any derogatory marks that need an explanation.
• →Income: employment stability and amount for salaried borrowers; for self-employed or variable income, typically two years of T1 Generals and Notices of Assessment plus a documented calculation method.
• →Down payment: source and seasoning — typically 90 days of history on the account — with a paper trail for gifts or large deposits.
• →Property: the purchase agreement, appraisal or valuation, and whether the property itself meets the lender's and, where applicable, the insurer's (CMHC, Sagen, or Canada Guaranty) requirements.

Insured deals carry additional limits — insured mortgages are capped at a maximum GDS of 39% and TDS of 44% — and since December 15, 2024, insured price caps rose to $1.5 million with 30-year amortizations available to first-time buyers and buyers of new builds. Uninsured files are underwritten against the individual lender's own ratio guidelines, which can differ.

Whatever the lender, program, or file type, every underwriting decision comes back to five factors:

1. 01Character: credit history and track record of managing debt responsibly.
2. 02Capacity: the ability to service the debt — income against obligations, measured through GDS/TDS and the stress test.
3. 03Capital: the borrower's own money in the deal — down payment size and source.
4. 04Collateral: the property itself, and whether its value supports the loan.
5. 05Conditions: the broader context — loan purpose, market conditions, and anything specific to the deal.

A weak factor doesn't automatically sink a file — strong capital can offset a thinner credit history, for instance — but every underwriter is running some version of this five-factor check, which is why packaging a file to speak to all five, not just the obvious ones, produces fewer conditions.

GDS (Gross Debt Service) measures housing costs — mortgage payment, property tax, heating, and applicable condo fees — against gross income. TDS (Total Debt Service) adds every other debt obligation into that same ratio. Insured mortgages are capped at a maximum GDS of 39% and TDS of 44%; uninsured lenders set their own thresholds, generally in a similar range.

The mortgage stress test requires borrowers to qualify at a minimum qualifying rate — the greater of their contract rate plus 2%, or 5.25% — per OSFI's B-20 infosheet for uninsured mortgages, with the Department of Finance applying the equivalent standard to insured deals. It's the single biggest factor in how much a borrower actually qualifies for, and it's worth re-explaining to every client — approved rate and qualifying rate are two different numbers.

Everything above describes what the underwriter is checking. The broker-side skill is anticipating it: submitting a file that reads as already-answered rather than open-ended. That means whole, current documents (not “page 1 of 4”), a written income calculation for anything non-standard, a paper trail for every deposit, and a short cover note flagging — and explaining — whatever the underwriter would otherwise have to ask about.

We go deep on the exact document stack and the ten-minute pre-submission ritual that catches most of this in our submission checklist article, and the fully expanded version lives in the 27-point pre-submission checklist. If you want the underwriting-specific version of that discipline, the Pre-Underwriting File Review Checklist walks through exactly what to check before a file leaves your desk. At volume, running that discipline on every file is exactly the underwriting-style pre-review a fulfillment specialist or an early-access tool like Treadstone's AI mortgage underwriting is built to run consistently.

With roughly 1.15 million Canadian mortgages renewing in 2026 and about 60% of all outstanding mortgages renewing by the end of the year (CMHC), lender underwriting teams are about to see meaningfully more volume — which historically means less patience for incomplete files and slower turnaround on the ones that need rework. Brokers who package clean now will feel that squeeze the least.

See our companion piece on the 2026 renewal wave for what that volume means for broker capacity planning more broadly.