How to Qualify for a Mortgage with Lower Income in 2025

📰 Blog Post:

Introduction

Buying a home in Canada isn’t easy — especially if your income is modest. But with new programs, flexible lending options, and smart financial planning, qualifying for a mortgage with lower income in 2025 is still very possible.

Whether you’re a first-time buyer or looking to re-enter the market, this guide explains how to boost your approval chances and secure an affordable mortgage this year.

1️⃣ Understand How Lenders Assess Income

Lenders calculate how much you can borrow using two key ratios:

• Gross Debt Service (GDS): housing costs shouldn’t exceed 39% of your gross income.

• Total Debt Service (TDS): all debts combined shouldn’t exceed 44% of your income.

Even if your income is lower, you can still qualify by reducing debt, adding co-borrowers, or showing consistent savings and rental history.

2️⃣ Explore Low-Income Mortgage Programs

There are several programs in 2025 designed to help buyers with limited income:

🏠 CMHC Flex Down:
Allows you to buy a home with as little as 5% down, even if part of your down payment is borrowed.

💰 First Home Savings Account (FHSA):
Lets you save up to $8,000 annually, tax-free, toward your first home.

🏦 Alternative or “B” Lenders:
More flexible on income verification, ideal for self-employed or contract workers.

💬 Tip: A mortgage broker can identify lenders who accept non-traditional income sources, such as gig work or bonuses.

3️⃣ Increase Your Down Payment

Even a small increase in your down payment can make a big difference.
For example, raising your down payment from 5% to 10% lowers your loan amount and reduces your monthly payment, improving affordability.

Consider using RRSP Home Buyers’ Plan (HBP) funds or family gifts to help meet the threshold.

4️⃣ Pay Down High-Interest Debt First

Your credit utilization directly affects your borrowing power.
Paying off or consolidating high-interest debt — like credit cards or personal loans — can boost your credit score and reduce your TDS ratio, helping you qualify for a larger mortgage amount.

5️⃣ Consider a Co-Borrower or Guarantor

Adding a co-borrower (such as a partner or family member) can significantly improve your approval odds.
Their income and credit profile are factored into your application, giving lenders more confidence in repayment ability.

If the co-borrower won’t live in the home, they can act as a guarantor, which still strengthens your file without being on title.

6️⃣ Look at Longer Amortization Periods

Choosing a 30-year amortization (where available through alternative lenders) lowers your monthly payment, even if it slightly increases long-term interest costs.

For lower-income buyers, this strategy often makes the difference between approval and rejection.

7️⃣ Use Government Incentives Wisely

Several government programs can help make homeownership possible in 2025:

• First-Time Home Buyer Incentive (FTHBI): Offers shared equity with the government to lower your payments.

• GST/HST Rebate: Reduces closing costs on new-build homes.

• Provincial grants (like Ontario’s Land Transfer Tax rebate) for eligible buyers.

8️⃣ Work With a Mortgage Broker

A broker can access multiple lenders, including credit unions, B lenders, and private lenders, who often have more flexible approval criteria than major banks.
They’ll also help you structure your application to highlight income stability and overall financial strength.

Conclusion

Qualifying for a mortgage with lower income in 2025 may take strategy, but it’s absolutely possible.
By reducing debt, leveraging programs, and partnering with the right broker, you can unlock financing options that make homeownership a reality — even without a high income.

Now’s the perfect time to explore your eligibility and start planning your next move toward owning your first home.