Financing

Everything First-Time Buyers Need to Know About Mortgages in Quebec

By Georges Matar · June 2, 2025 · 6 min read

The mortgage process intimidates most first-time buyers. It shouldn’t.

Once you understand what each piece actually means (and what questions to ask), the path becomes much clearer. This article is the guide I give every first-time buyer I work with before they set foot in a bank or broker’s office.

Pre-Approval vs. Approval: The Difference That Costs People

A pre-approval is an estimate based on what you told the lender. The final approval happens after a full review of your file AND the specific property you are buying.

I have seen pre-approved buyers get refused at the final stage. The reasons are almost always the same: a job change, a new loan or car purchase, a credit score that shifted, or a property that the lender determined didn’t qualify.

The rule during the period between your pre-approval and your closing date: change nothing in your financial life. No new vehicles. No new credit cards or loans. No employment changes. Not until after the keys are in your hand.

The Stress Test: What It Means and How It Works

To qualify for a mortgage in Canada, you must prove you can afford the payments at a higher rate than you’re actually paying. This is called the mortgage stress test.

The qualifying rate is the higher of:

Your actual contract rate plus 2%
5.25%

If your mortgage rate is 5%, you must qualify at 7%. This means you qualify for significantly less than your bank’s calculator suggests when you use the current rate.

The stress test exists to protect both borrowers and the financial system. The practical result: your actual buying power is lower than many people expect. A mortgage broker can help you optimize your qualification before you start searching.

Your Bank vs. A Mortgage Broker

Most first-time buyers go directly to their bank. Here is what that means: you are seeing one lender’s products. That lender has strong incentive to offer you the rate and conditions that maximize their margin.

A mortgage broker has access to 20 to 30 lenders: banks, credit unions, and alternative lenders. They compare on your behalf and find the most competitive rate and conditions available to your profile. Their fees are typically paid by the lender, not by you.

My advice: start with a mortgage broker. Get the best offer available. Then bring that offer to your own bank and ask them to beat it. You will almost always get a better outcome than if you had stayed exclusively with your bank.

Fixed vs. Variable: The Decision That Depends on You

This is the question I get most often, and my answer is always the same: there is no universally correct answer.

Fixed rate: You know exactly what you pay for the full term. You pay a small premium for that certainty. If rates fall, you don’t benefit. If rates rise, you’re protected.

Variable rate: Your rate moves with the Bank of Canada’s policy rate. Historically, variable rates have beaten fixed rates over long periods, but not always, and not predictably.

The real question is your risk tolerance. If a $200/month increase in payments would stress your budget significantly, choose fixed. If you have financial flexibility and a longer horizon, variable may serve you well over time.

In 2025, with the Bank of Canada in a rate-cutting cycle, the calculus is different than it was in 2022 or 2023. What I can tell you with confidence: the answer depends on your specific financial situation, not on what a general article tells you.

The Down Payment Sources You May Not Know About

FHSA (First Home Savings Account, Compte d’épargne libre d’impôt pour l’achat d’une première propriété): This is one of the most powerful financial tools available to first-time buyers in Canada. Introduced in 2023, it allows you to save up to $40,000 over your lifetime in an account where contributions are tax-deductible (like an RRSP) and withdrawals for a home purchase are completely tax-free (like a TFSA).

Contribution room accumulates at $8,000 per year, with the ability to carry forward one year of unused room. Open this account now, even if you’re not buying for three years. The room you accumulate is available to you when you are ready.

Home Buyers’ Plan (RAP): Withdraw up to $35,000 from your RRSP for a first home purchase. The amount is repayable to your RRSP over 15 years, with a minimum of 1/15th per year. If you don’t repay in a given year, that portion is added to your taxable income for that year.

Combining FHSA and RAP, many buyers can access $40,000 to $75,000+ in down payment funds from registered accounts, tax-efficiently.

Parental gift: A parent can give you part of your down payment. The lender will require a gift letter confirming it is not a loan. This is legal and common, but must be disclosed fully to the lender.

The Real Cost of Borrowing

If you borrow $400,000 at 5% over 25 years, here is what you actually repay: approximately $700,000. That is $300,000 in interest.

At 4%, the same loan costs approximately $630,000. The 1% difference saves you $70,000 over 25 years.

This is why negotiating your rate matters. And why using prepayment privileges (most mortgages allow you to prepay 10% to 20% of the original principal per year without penalty) can save you years off your amortization.

Put your tax refund against the principal. Put your annual bonus against the principal. Even $5,000 extra per year applied to principal can take 4 to 5 years off a 25-year mortgage.

The One Mistake to Avoid at Renewal

When your mortgage term ends, your bank sends a renewal letter with “our best rate.” In most cases, this is not their best rate. It is the rate that produces their best margin.

You are a proven, reliable client who has made payments for 5 years without missing one. You have significant negotiating leverage.

Start comparing rates 90 to 120 days before your renewal date. Bring a competing offer to your bank. Ask them to match or beat it. If they won’t, switch lenders; the process is simpler than most people think, and the new lender often covers transfer costs.

A well-negotiated renewal can save you $5,000 to $15,000 over the next 5-year term.

Questions to Ask Before Signing Any Mortgage

What lenders do you have access to, and which ones are you recommending?
What is the total annual percentage rate (APR), not just the nominal rate?
What are the prepayment privileges?
What is the penalty if I need to break the term early?
Are there any origination fees I need to pay?
How are you compensated: by the lender, by me, or both?

A mortgage professional who answers these questions clearly and without hesitation is one you can trust.

Questions about financing your first property in Quebec? I work closely with mortgage specialists who know this market well. Contact me and I’ll point you in the right direction.