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5 reasons mortgage applications get declined in Canada (and how to fix them)

Short answer: Most declines come down to debt ratios, credit, income documentation, down payment source, or property type, and every single one of those is fixable with the right plan.

Your debt ratios are too high

Lenders cap how much of your income can go toward housing and total debt combined. Carrying a car loan, a line of credit, and a couple of credit cards close to their limits can push you over that line even with a solid income. The fix is usually paying down revolving debt before you apply, not necessarily earning more.

Your credit needs some work

A thin credit file, a low score, or a couple of missed payments can all trigger a decline from a traditional A-lender. This one stings because it feels personal, but it's just a number. Sometimes the fix is a few months of on-time payments. Sometimes it's moving to a B-lender who looks at the full picture instead of just the score.

Your income doesn't look the way lenders expect

Self-employed, commission-based, or newer-to-a-job income gets scrutinized harder, even when the actual dollars are solid. Lenders want a documented, provable pattern, not just a good year. This is where working with a broker who knows which lenders are flexible on income type makes the biggest difference.

Your down payment source raised questions

Lenders want to see exactly where your down payment came from, and money that showed up recently without a clear paper trail gets flagged. Gifted funds need a signed letter. Savings need a few months of visible history. None of this is hard to fix, it just needs to be set up correctly before you submit, not explained after the fact.

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