As a first-time home buyer or for someone who has not purchased a home in some time, obtaining a mortgage can be challenging. Your Calgary mortgage specialist or banker will be able to explain all the details but here is some information to get you started.

Obtaining a Mortgage

Your mortgage specialist, banker or broker will require financial statements to approve your mortgage application. The application process will proceed more smoothly if you have gathered and organized the following:

a. Letters of Employment – You are required to prove your employment status by obtaining a letter of employment from your employer.

b. Pay Stubs – Part of your proof of income comes from pay stubs. Keep 6 months of pay stubs to help prove your income level.

c. Gifts – Any money that has been gifted to you for the mortgage, down payment, etc.. needs to be established with a gift letter.

d. Last Two Years Income – Sometimes your mortgage broker/banker will need to establish an income level. It is a good idea to have your last two years of tax statements prepared.

e. Beacon Score – Know your own beacon score or credit rating. Your banker or mortgage broker will have to obtain this independently but it’s a good idea to know your credit score and what it means for your approval process.


Shop around

Each broker or bank can offer different mortgage rates and various options on your mortgage. If you are not in a hurry, then it is a good idea to shop around for the best mortgage for you.


First Payment

Your first mortgage payment is usually due one month after your possession date. You are not responsible for mortgage payments until such time as you have taken possession of the home.


Mortgage Terms:

This list details some common terms used by real estate agents and mortgage brokers and specialists. If you have any questions please contact Miranda.


A feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden).


Repayment of a mortgage loan through monthly instalments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years).

Annual Percentage Rate

Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.


The first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.


A document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.


Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap.

Assumable Mortgage

A mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.


A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Building Code

Based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.


A detailed record of all income earned and spent during a specific period of time.


A limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash Reserves

A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of Title

A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.


Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing Costs

Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.


An amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction.


A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conventional Loan

A private sector loan, one that is not guaranteed or insured by the Canadian government.

Credit History

History of an individual’s debt payment; lenders use this information to gauge a potential borrower’s ability to repay a loan.

Credit Bureau Score

A number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Debt-to-Income Ratio

A comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.


The document that transfers ownership of a property.


The inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.


Failure of a borrower to make timely mortgage payments under a loan agreement.


Money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Discount Point

Normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down Payment

The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.


An owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s)from the fair market value of the property.

Escrow Account

A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Fair Market Value

The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fixed-Rate Mortgage

A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.


A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Home Inspection

An examination of the structure and mechanical systems to determine a home’s safety; makes the potential homebuyer aware of any repairs that may be needed.

Homeowner’s Insurance

An insurance policy that combines protection against damage to a dwelling and Is contents with protection against claims of negligence )r inappropriate action that result in someone’s injury or )property damage.


A fee charged for the use of money .

Interest Rate

The amount of interest charged on a monthly loan payment; usually expressed as a percentage.


Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

Rent to Own

Assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.


A legal claim against property that must be satisfied when the property is sold.


Money borrowed that is usually repaid with interest.

Loan Fraud

Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-Value (LTV) Ratio

A percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.


Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss Mitigation

A process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.


A lien on the property that secures the Promise to repay a loan.

Mortgage Broker

A firm that originates and processes loans for a number of lenders.

Mortgage Insurance

A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Offer to Purchase

Indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.


Principal, Interest, and Taxes – the three elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes goes to the city for payment of property taxes.


Lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase and the pre-approval has not expired.


A lender informally determines the maximum amount an individual is eligible to borrow.


An amount paid on a regular schedule by a policyholder that maintains insurance coverage.


Payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty.


The amount borrowed from a lender; doesn’t include interest or additional fees.


A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Real Estate Agent

An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.


A real estate agent or broker who is a member of the Canadian Real Estate Association.


Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Real Property Report

A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Title Insurance

A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Title Search

A check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.


The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.