Glossary
Net Worth
Net worth is the total value of what you own minus what you owe — a snapshot sometimes reviewed during a Canadian mortgage application..
Net worth is the total value of everything you own minus everything you owe at a point in time — your assets minus your liabilities. It is a snapshot, not a score, and it changes the moment markets move or a loan balance is paid down. Some Canadian mortgage lenders ask for a net worth statement as part of an application, particularly for self-employed borrowers, alternative or private lending, and files where the down payment comes from a gift or a property sale.
What counts toward net worth
Assets are things with resale or cash value:
- Liquid assets — chequing and savings balances, TFSA and RRSP holdings, non-registered investments.
- Property — a home at fair market value, a cottage, land, or a rental property.
- Other assets — vehicles at market value, business interests, valuable personal property.
Liabilities include the outstanding balance on your mortgage, a home equity line of credit, credit card balances, car loans, student loans, and personal lines of credit. A home is counted at what it would sell for today, not at what you paid for it.
Why lenders look at net worth
Qualifying for a mortgage in Canada is mainly about income and debt ratios. Federally regulated lenders apply OSFI Guideline B-20 and the mortgage stress test, and the standard affordability measures are the GDS and TDS ratios. Net worth is secondary, but it can support a file in situations such as self-employed borrowers whose income verification rests on business financials, refinancing or debt consolidation where a lender wants the full debt picture, and private or alternative lending where a borrower's asset position can carry more weight.
A net worth statement is usually a simple two-column list — assets on one side, liabilities on the other — with supporting account statements. Because the largest asset is often the home itself, net worth and home equity are closely linked: equity grows as the mortgage is paid down and as property values change.
Net worth versus down payment
A down payment is the specific source of funds used at purchase, and lenders must verify where that money came from. Net worth is broader — it counts everything you own, whether or not it is liquid. A high net worth tied up in property does not automatically mean cash is available, and lenders distinguish between liquid and illiquid assets. How much you can borrow is driven by income and debt service ratios, not by net worth alone.
Frequently asked questions
Does net worth affect mortgage approval in Canada?
Only indirectly. Canadian lenders qualify borrowers mainly on income and the GDS and TDS ratios, and federally regulated lenders apply the mortgage stress test under OSFI Guideline B-20. A net worth statement can strengthen a file — for example for self-employed borrowers or refinance applications — but a high net worth does not replace qualifying income.
How do I calculate my net worth?
Add up your assets: bank accounts, TFSA and RRSP balances, investments, vehicles, and property at fair market value. Then subtract your liabilities: the mortgage balance, lines of credit, credit card balances, car loans, and student loans. The difference is your net worth. Lenders may ask for this as a signed net worth statement with supporting documents.
Is home equity included in net worth?
Yes. Home equity is your property's fair market value minus the mortgage balance secured against it, so it is one of the largest asset lines for most Canadian homeowners. It counts toward net worth but is illiquid — you cannot spend it without selling, refinancing, or borrowing against the home.
Sources
Related terms
- Home Equity — Home equity is the portion of your home you actually own: the property's current market value minus everything still owed against it.
- Down Payment — A down payment is the portion of a home's purchase price a buyer pays upfront, reducing the amount borrowed through a mortgage.
- Total Debt Service Ratio (TDS) — The Total Debt Service Ratio (TDS) is the share of gross income that goes toward all debt payments, capped at 44% by most Canadian lenders.
- Debt-to-Income Ratio — Your total debt compared with your total income — a broader measure than the debt service ratios Canadian lenders use at approval.
- Mortgage Pre-Qualification — An early, non-binding estimate of how much a lender or broker thinks you might borrow, typically prepared without a credit check or verified documents.