Mortgage Renewal When Your Income Is CPP and OAS
Many Canadians reach retirement and realize their mortgage renewal is coming up at the same time their employment income has stopped.
If your main income now comes from:
- Canada Pension Plan (CPP)
- Old Age Security (OAS)
- Guaranteed Income Supplement (GIS)
- Pension or RRIF withdrawals
You may be wondering:
Will the bank renew my mortgage? And what happens if my income is lower than before?
The good news is that renewal is usually easier than applying for a brand-new mortgage — but your situation still matters.
Do You Need to Requalify at Renewal?
If you renew your mortgage with your current lender, you typically do not need to requalify.
That means:
- No income verification
- No credit check (in most cases)
- No stress test
Your lender will usually offer a renewal rate, and you simply choose a new term.
This is the easiest option for retirees living on fixed income.
When You Do Need to Qualify Again
You will need to requalify if you:
- Switch to a new lender
- Increase your mortgage amount
- Refinance or take equity out
- Change the amortization period
In these cases, the lender will review:
- Your retirement income
- Your credit score
- Your debt levels
Can CPP and OAS Be Used as Income?
Yes. Most lenders accept retirement income such as:
- CPP
- OAS
- GIS (some lenders)
- Employer pensions
- RRIF or annuity income
- Investment income
The key factor is stability. Government benefits like CPP and OAS are considered reliable because they are guaranteed for life.
How Much Mortgage Can You Qualify For?
Lenders use two main ratios:
1. Gross Debt Service (GDS)
Housing costs should generally be under 39% of gross income
This includes:
- Mortgage payment
- Property taxes
- Heating
- Condo fees (if applicable)
2. Total Debt Service (TDS)
All debts combined should be under 44% of gross income
This includes:
- Credit cards
- Car loans
- Lines of credit
- Mortgage
Example
Monthly retirement income:
- CPP: $1,000
- OAS: $800
- Pension/RRIF: $700
Total: $2,500/month
Maximum housing costs (approx.):
- 39% × $2,500 = $975/month
If your mortgage payment is higher than this, qualifying with a new lender may be difficult.
What About the Mortgage Stress Test?
If you switch lenders or refinance, you must pass the stress test.
This means you must qualify at:
- The contract rate plus 2%, or
- The Bank of Canada qualifying rate
For retirees with lower income, this can reduce the amount you qualify for.
How Credit Score Affects Your Renewal
Your credit still matters, especially if you:
- Switch lenders
- Refinance
- Apply for a new mortgage
Generally:
- 680+ = good approval chances
- 600–679 = possible, but fewer options
- Below 600 = limited choices, higher rates
For retirees, strong credit helps offset lower income.
What If Your Income Is Too Low?
If qualifying is difficult, you may consider:
- Staying with your current lender (no requalification)
- Extending the amortization (if allowed)
- Paying down part of the mortgage before renewal
- Using savings to reduce the balance
- Adding a co-signer (in some cases)
Special Considerations for GIS Recipients
If you receive GIS, be cautious about:
- Large RRIF withdrawals
- Taking equity out of your home
Higher taxable income can reduce GIS benefits.
Planning withdrawals carefully is important.
The Bottom Line
Yes, you can renew a mortgage using CPP and OAS income.
- Staying with your current lender is usually the easiest option
- Switching lenders requires full qualification and a stress test
- Stable retirement income is accepted, but lower income limits how much you can borrow
- Good credit becomes more important after retirement
If you’re approaching renewal, reviewing your income, debt levels, and credit ahead of time can help you avoid surprises and keep your housing costs manageable in retirement.