Mortgage refinance requirements in Canada: 80% LTV, stress test and documents

Short answer: The main mortgage refinance requirements in Canada are enough equity (your new total borrowing usually can't exceed 80% of your home's appraised value), passing the stress test, debt ratios a lender can accept, a credit history the lender is comfortable with, and income you can document. A refinance is underwritten like a brand-new mortgage, so the lender checks all of it again, even if you've paid on time for years ^[1][2][3].

This guide is the checklist version: what each requirement means, how lenders measure it, and what to have ready. For the bigger picture (why people refinance, the full cost breakdown and the alternatives in depth), see our complete mortgage refinance guide or our mortgage refinancing page.

Mortgage refinance requirements at a glance

1. Equity: the 80% loan-to-value rule

The Bank Act stops banks from making or refinancing a conventional residential mortgage above 80% of the property's value, counting any mortgage with an equal or prior claim ^[4]. FCAC puts it plainly: you can usually borrow up to 80% of your home's value, minus what you owe ^[1].

Illustration: on a home appraised at $750,000, 80% is $600,000. If you owe $430,000, the most you could add is about $170,000, before any penalty or closing costs you roll in.

Two details catch people out:

• The appraisal sets the value, not an online estimate or your property tax assessment ^[1].
• A HELOC portion is capped at 65% of the home's value. Anything between 65% and 80% has to be on an amortizing mortgage portion ^[1][6].

There's one notable exception. Through CMHC's insured refinance for building a secondary suite, owner-occupied homes with an as-improved value under $2 million can be financed up to 90% of that value with up to a 30-year amortization, as long as the extra money is used for the suite (no equity takeout) and the suite isn't used as a short-term rental ^[7].

2. The stress test still applies when you refinance

Federally regulated lenders must qualify you at the higher of 5.25% or your contract rate plus 2%, and FCAC says you'll need to pass this test if you refinance or take out a HELOC ^[2][3]. Lenders that aren't federally regulated, such as many credit unions, may also ask you to pass a stress test ^[3].

For example, at an illustrative 4.29% contract rate, you'd qualify at 6.29%. On a $500,000 refinance over 25 years, that's the difference between an actual payment of about $2,709 a month and a qualifying payment of about $3,286.

You may have heard that renewing with a new lender can skip the stress test. That exemption is only for straight switches, where the loan amount and amortization don't increase. Taking out equity doesn't qualify ^[8], so a refinance is stress-tested.

Not sure if you'd pass? A licensed 8Twelve agent can run your numbers across 65+ lenders and tell you what you could qualify for, OAC, before you apply. Check your refinance options

3. Debt service ratios: GDS and TDS

Lenders measure affordability with two ratios ^[3]:

• GDS (gross debt service): mortgage payment, property tax, heating and half of any condo fees, as a share of gross income. FCAC's guide is no more than 39%.
• TDS (total debt service): GDS plus all other debt payments (cards, car loans, lines of credit, student loans, support). FCAC's guide is no more than 44%.

You may still qualify slightly above those levels, but FCAC notes you're taking on more risk ^[3]. Lenders calculate the mortgage payment at the stress-test rate, which is why a debt consolidation refinance can help you qualify.

Worked example (illustrative):

The figures are assumptions for illustration, with semi-annual compounding. Our debt consolidation mortgage guide walks through three full examples, including the interest trade-off.

4. Credit

There's no single regulatory minimum score for a refinance. FCAC says lenders look at your credit report and score, and with weak credit a lender may refuse or ask for a co-signer ^[3]. In our experience, recent missed payments and maxed-out cards matter more than one old blemish, and most lenders will want an explanation for anything unusual. Order your free credit report before you apply so there are no surprises.

5. Income and the documents you'll need

FCAC lists what lenders and brokers typically ask for: identification, proof of employment, and information about your assets and debts. For employment, that usually means a recent pay stub plus your position and how long you've been with your employer; if you're self-employed, Notices of Assessment from the past two years ^[5].

Refinance document checklist:

• Everyone on title: government-issued photo ID. Anyone on title will need to sign the new mortgage.
• Employed: recent pay stub and an employment letter showing position, start date and salary ^[5].
• Self-employed: Notices of Assessment for the last two years ^[5]. In our experience, many lenders also ask for the full tax returns (T1 Generals) and business financial statements.
• Your current mortgage: the latest mortgage statement (balance, rate, maturity date).
• The property: your latest property tax bill, home insurance details and, for a condo, the monthly fee.
• Debts: recent statements for cards, loans and lines of credit, especially any you plan to pay out.
• Other income: rental leases, pension statements or support agreements, if you're using them to qualify.

The lender orders the appraisal, and there are usually legal, title and possibly discharge costs ^[1]. Our refinance costs guide breaks those down, along with the prepayment penalty if you refinance mid-term.

6. Timing and your current mortgage

You can apply to refinance at any time, but breaking a closed mortgage before maturity usually means a prepayment penalty, so the timing of your term is part of whether the numbers work. Refinancing at renewal avoids the penalty. If the renewal payment itself is what worries you, see options if you're struggling with your mortgage renewal. Also check how your current mortgage is registered: with a collateral charge, any other loans secured by it have to be repaid or moved if you change lenders ^[9].

If you don't meet the requirements yet

Not qualifying today doesn't mean you're out of options:

• Borrow less. A smaller refinance may fit within 80% and your ratios.
• Use a HELOC if you need flexible access rather than a lump sum, up to 65% of the home's value ^[1].
• Add a co-signer, which FCAC lists as an option some lenders may require ^[3].
• Pay down a debt first to bring your TDS under the limit, or wait for renewal to avoid a penalty.
• Consider an alternative or private lender for a short period. They're more flexible on credit and income but cost more. 8Twelve arranges these mortgages through third-party lenders; we don't lend or fund them. See our guide to private mortgage refinance fees in Ontario.

Step by step: refinancing with a broker

1. Gather your documents from the checklist above.
2. Get a realistic value range for your home and work out roughly 80% of it.
3. Have a broker run your ratios at the stress-test rate, including any debts you'll pay out.
4. Compare offers from several lenders, including the penalty and closing costs.
5. Appraisal and approval: the lender confirms value and income.
6. Sign with a lawyer or notary, who pays out your old mortgage and any debts.

From our desk: The most common surprise we see isn't credit. It's the appraisal coming in a little lower than the owner expected, which shrinks the room under 80%. Plan your numbers with a cushion.

If you have the equity, can pass the stress test and have your paperwork in order, a refinance is usually straightforward. If one piece is missing, a broker can show you which option gets you closest.

Run the numbers: see how paying out debts changes your monthly costs with our debt consolidation calculator, or read the full mortgage refinance guide.

This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.

Consolidating unsecured debt into your mortgage may lower your monthly payment but can increase the total interest paid over the amortization period. 8Twelve does not fund second or private mortgages; we arrange them with third-party lenders, and lender and brokerage fees are disclosed in writing before you commit. The worked examples use assumed rates, balances, income and costs, with semi-annual compounding, for illustration only. Rules checked against OSFI, FCAC, CMHC and the Bank Act on October 22, 2026.