TD Canada Trust Mortgage Review: Rates, Lending Guidelines and Who They Suit

TD Canada Trust Mortgage Review: Programs & Lending Guidelines

How TD Canada Trust's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

TD Canada Trust's Mortgage Offering — Residential

TD is a Schedule I bank lending through mortgage professionals as well as its branches, and the broker-channel offering covers most of the bank's residential range.

Core lending. Conventional mortgages with 20% or more down, and high-ratio insured mortgages below that, on purchases, refinances and transfers. Owner-occupied homes of up to four units with one occupied by the borrower, second homes occupied by the borrower or family, and rental properties.

FlexLine. TD's collateral-registered home equity product, combining a revolving line of credit with one or more fixed or variable term portions under a single plan limit. The revolving portion runs to 65% of value and the plan as a whole to 80%. It is available on rental properties, which is not universal, and it is excluded from a long list of specialty programs.

Cottage and recreational lending, as two separate programs. A recreational program for year-round properties with a permanent foundation, heat, water and proper sewage; and a cottage program for genuinely seasonal properties. Both cap the loan and prohibit rental income, and both require a full appraisal.

Also available: purchase-plus-improvements and refinance-plus-improvements with a large renovation allowance and a twelve-month construction window, bridge financing to 90 days, spousal buyouts to high ratios, assignment purchases on builder contracts, modular homes on owned land, leasehold financing on government leases, laneway homes, and hotel condominiums on an insured basis where they sit apart from the hotel operation.

Registration is a collateral charge, which is what makes FlexLine work and what makes a transfer out at maturity more involved than a standard charge.

Not financed: commercial property, co-operatives, former grow operations, reserve land, life leases, vacant land, fractional interests, rental pools, progress-draw construction, and anything in the territories.

TD Canada Trust Income and Qualification Requirements

Ratios by program.

680 is the pivot. Four points of GDS and three of TDS move with it, which on a typical income is tens of thousands of dollars of purchasing power.

Qualifying rate. The greater of the contract rate plus two points or the regulatory minimum, on conventional and insured mortgages and on FlexLine alike.

How income is read. TD separates fixed income from fluctuating income. Fixed income needs continuous employment of at least a year with probation completed, documented by a current pay record or deposit no more than 60 days old plus an annual document — an assessment, tax slip or year-end pay record. Fluctuating income — bonus, commission, overtime, casual — is averaged over two years, and where the variance exceeds 20% the lower figure is used unless an exception is justified.

Self-employed borrowers with documentable income qualify on a two-year average with a gross-up that is larger on conventional files than insured ones. Pushing the gross-up beyond the standard allowance is treated as a material exception requiring a much higher credit score and a lower loan-to-value. There is also an insured stated-income route for borrowers two years in business who cannot document conventionally.

Pension income is treated as fixed. Investment income is averaged over two years against filed returns and current statements. Support income counts with an agreement and deposit history, and support paid is a liability. Child benefits count in full but capped at half of total income, for children up to fifteen, without a gross-up. Foster income counts in full to the same cap with two years of experience. Provincial disability support is accepted where it is permanent, though general social assistance is not. Non-taxable income is grossed up on the standard sliding basis, and a northern allowance counts.

Foreign income other than US dollars requires an exception, converted at the current rate with the source and method documented.

Down payment. Insured files need 5% on the first portion of the price and 10% above, with the remainder borrowable and serviced, over 90 days of history. Conventional files need a minimum from the borrower's own resources. A borrower with a past bankruptcy cannot use gifted funds — the down payment must be their own.

Closing costs. 1.5% of the purchase price on insured files, with a lower requirement in Alberta.

Tax arrears are tolerated up to the lesser of a small share of reported income or a fixed amount per borrower.

TD Canada Trust's Specialty Programs

Net Worth Program. For borrowers with substantial liquid assets and low income — at least $250,000 in qualifying assets and a modest minimum Canadian income. Cash, investments, registered and tax-free savings, margin accounts and equity from a sold property all count. Lending to 80% of value subject to the sliding scale, requiring a 650 score, with total debt service allowed to run to 80%. Gifted down payments are not permitted.

Professionals program. Newly licensed physicians and dentists within three years of practice, medical residents and fellows, and newly licensed veterinarians. Built for early-career professionals whose current income does not support the mortgage under standard rules.

New to Canada. Immigrants within the past five years with limited credit history and at least three months of full-time Canadian employment. Insured purchases and purchase-plus-improvements only — no refinances, no cottages, no second homes, no investment property and no FlexLine. Credit is established from a US bureau, an international report, or rent and utility history.

Non-permanent residents. Temporary residents authorized to work in Canada, limited to one property. Conventional purchases to 80% of value and refinances to 65%, or insured lending at standard maximums. Recreational and multi-unit properties are excluded.

Non-residents. Canadian citizens and permanent residents living abroad, and foreign residents, financing up to two properties. Conventional only, capped at 65% of value with 35% down from the borrower's own resources and a full appraisal. Self-employed income is not eligible.

Cottage program. Seasonal-use properties with a kitchen, bathroom, electricity, heating and road access, capped at 50% of value and a limited loan size, with no rental income permitted.

Recreational program. Year-round properties with a permanent foundation, permanent heat, potable water and proper sewage, capped at 65% of value, again with no rental income.

Student and rooming house financing. Considered as a rare exception, purchase only, capped at 65% of value with a limited loan size and a 25-year amortization. Most banks decline these outright.

Military program. Canadian Forces personnel reassigned at home or abroad have the prepayment charge — whether three months' interest or a rate differential — waived on a posting. For a member moving every few years, that is worth more than a rate discount.

Age-restricted and hotel condominiums are each financeable under defined conditions, both of which most lenders exclude.

Cashback and switch bonuses are available on longer closed terms with a minimum principal, conditional on banking with TD.

Minimum Credit Scores & Treatment of Liabilities

Scores.

Credit history. The bureau must be less than 30 days old. On conventional lending, a bankruptcy is considered where it has been discharged at least two years, the debt was substantial, there is an acceptable explanation such as a business failure or marital breakdown, stability has been re-established, no debt is owed to the bank, and no gifted funds are used. Insured files add a requirement to re-establish a major bank credit product. At least two years of credit history with two trade lines is expected generally.

Both bureaus are used.

Liabilities. Unsecured credit at 3% of the balance, higher in Quebec. Secured lines are serviced on the full limit amortized over 30 years — the limit rather than the balance, though over a longer schedule than most lenders use. Student lines at a percentage of the limit. Loans at the contractual payment where more than three months remain.

Shelter costs are among the highest published in this directory — over $1,600 a month in the Toronto and Vancouver areas, around $1,450 in other major centres and $1,150 elsewhere, with reductions where the borrower lives with a spouse who owns, or boards with family. For a borrower buying a rental while renting themselves, this materially reduces what they qualify for.

Property taxes are the homeowner's to pay — TD does not collect them.

Guarantors not on title sign a guarantee agreement, with additional formality in some provinces and independent legal advice where the guarantor does not benefit.

Power of attorney is always an exception, accepted only where both the donor and the attorney bank with TD.

No lender fees, though a discharge fee applies in most provinces and cannot be waived.

Terms & Amortization Options

Terms. Six-month fixed, one to five years fixed, and six-, seven- and ten-year fixed — an unusually deep long end. A five-year closed variable, and three- or five-year variable term portions within FlexLine.

Amortization. Minimum five years. Conventional: up to 30 years. Insured: 25 years, extending to 30 for first-time buyers on newly built homes. FlexLine term portions run to 30 years but are assessed on a 25-year schedule, so the longer amortization lowers the payment without improving qualification.

Payments. Weekly, biweekly, semi-monthly and monthly, each with a rapid (accelerated) option — the widest set in this directory. The frequency is chosen at signing rather than at application.

Prepayment. Up to 15% of the original principal each year on a closed fixed mortgage, plus the ability to double the payment over the term and then reduce it back — genuinely flexible, and more useful than a larger one-time lump sum for a borrower whose income rises and falls. Unused prepayment room is not credited at payout unless it has actually been exercised, so a borrower planning to break the mortgage should use it first.

Penalties. Fixed: the greater of three months' interest or an interest rate differential. Variable: three months' interest. The replacement policy waives or rebates three months' interest where the mortgage is replaced with a new closed term within a year of discharge, and within 120 days of maturity the rate differential and any cashback clawback are waived as well.

Variable-rate mortgages have a fixed payment, which means a trigger point exists: if rates rise far enough that the payment no longer covers interest, the balance grows and the borrower must act. They are not portable, transferable or assumable.

Rate holds. 120 days on resale purchases and refinances, with the borrower receiving the lower of the committed rate or the posted rate at funding. A rate drop is available on request rather than automatically, and a material change to the term, product, amount or occupancy loses the booking.

Porting. An existing rate and term can move to a new property, requiring new money on the file.

Renewal defaults to a one-year open term where the borrower does not respond, which prices considerably higher than a closed term.

Special Notes

• 680 is the ratio pivot, moving GDS and TDS from 35/42 to 39/45.
• Shelter cost proxies are the highest in this directory — over $1,600 monthly in Toronto and Vancouver. A borrower who rents and is buying an investment property carries that in the ratios.
• Secured lines are serviced on the limit, not the balance, though over a 30-year schedule.
• Variable-rate mortgages are not portable or assumable, and carry a trigger point where the payment stops covering interest.
• The military posting waiver removes the prepayment charge entirely on a reassignment.
• The replacement policy rebates three months' interest where the mortgage is replaced within a year, and waives the rate differential entirely inside 120 days of maturity.
• Two distinct cottage programs — seasonal at 50% of value, year-round at 65% — and neither permits rental income.
• Student and rooming houses are financed as a rare exception at 65% of value, where most banks decline outright.
• Age-restricted and hotel condominiums are financeable under defined conditions.
• A past bankruptcy rules out gifted down payment — the funds must be the borrower's own.
• Collateral charge registration on everything.
• No lending in the territories.
• Single-resource industry towns are restricted, named specifically across several provinces, requiring default insurance and excluding FlexLine.
• Property taxes are not collected by the bank.
• Prepayment room is not credited at payout unless used first.
• Property standards. A proper foundation, adequate services, livable condition, at least 97% complete, and remaining economic life beyond the amortization. Land value cannot exceed most of the appraised value. Minimum 850 square feet above grade for a house and 440 to 600 square feet for a condominium depending on the market, with smaller units only where an insurer covers them. Laneway homes qualify at a small minimum size where self-contained and not the main structure.

Service Area

All ten provinces. The territories are excluded entirely.

Small communities are classified by population and marketability rather than by distance from a centre — a more forgiving standard than the fixed-kilometre radius several lenders in this directory apply.

Restricted communities — single-resource industry towns — are named specifically across Quebec, Ontario, Alberta and British Columbia. In those markets, default insurance is required, FlexLine is unavailable, and conventional lending above a limited ratio is an exception. The logic is resale risk when one employer dominates a town.

Flood plain properties face heightened review and may be declined unless the appraisal supports the risk.

Rural properties are financed on the home plus up to ten acres, and unusually, outbuildings are included in that value — most lenders here exclude them. Active farming is not permitted, no commercial agricultural activity is allowed, and the borrower's income cannot come from the property. Properties over five acres require a full appraisal.

Quebec carries its own rules on several points, including who pays for the appraisal, which title providers are used, and which transfer structures are available.

Minimum purchase prices for condominiums vary by province, highest in the Toronto and Vancouver areas and lowest in the Atlantic provinces.

Loan-to-Value Treatment

Property use is the main driver here. The same borrower on the same income faces 80% on a home, 75% on a rental, 65% on a year-round recreational property and 50% on a seasonal cottage. Deciding what the property is — and how it will be used — matters more to the outcome than the credit file.

Credit score adjusts the rental ceiling, with 730 lifting a rental purchase from 75% to 80%.

The sliding scale applies to conventional mortgages, reducing lending above a market-specific threshold, with a lower threshold outside urban markets and separate treatment for recreational and cottage properties.

Rental income treatment. Where the borrower occupies part of the property, up to the full gross rent can be used but capped at half of total application income. With two or more rentals a full worksheet applies — rent against actual payments, taxes, utilities, maintenance and insurance — with any deficit added as a liability. Vacancy allowances vary by market. Where there is no lease, market rent can be used but the loan-to-value drops to 65%.

Net worth requirements on rentals depend on the debt coverage: liquid assets are required where coverage falls below the threshold, with the amount scaling to the shortfall.