Canadian Financial Glossary
Last verified · Methodology
Fifteen essential Canadian financial terms explained in plain English. From CMHC and the stress test to RRSP and TFSA, each definition includes a worked example and links to the relevant free Canadian calculator.
Mortgages and Property(6)
CMHC Mortgage Default Insurance
Mandatory insurance required when your down payment is less than 20%, protecting the lender if you default. Provided by CMHC, Sagen, or Canada Guaranty.
Try the CMHC Insurance Calculator→Mortgage Stress Test
The federal rule requiring lenders to qualify borrowers at the greater of their contract rate plus 2% or the 5.25% benchmark, ensuring borrowers can handle rate increases.
Try the Canada Mortgage Calculator→Loan-to-Value (LTV) in Canada
The ratio of your mortgage to your home's value, expressed as a percentage. Determines CMHC insurance eligibility and mortgage rate tiers in Canada.
Try the CMHC Insurance Calculator→Mortgage Amortization in Canada
The total period over which a mortgage is repaid. In Canada, CMHC-insured mortgages are limited to 25 years; uninsured first-time buyer mortgages may extend to 30 years.
Try the Canada Mortgage Calculator→Closing Costs in Canada
The additional expenses beyond the purchase price paid at closing, typically 1.5% to 4% of the home price. Includes land transfer tax, legal fees, title insurance, and home inspection.
Try the Land Transfer Tax Calculator→Variable vs Fixed-Rate Mortgage
A fixed-rate mortgage locks your rate for the entire term (usually 5 years). A variable rate moves with the Bank of Canada's prime rate, potentially saving money when rates fall.
Try the Canada Mortgage Calculator→Tax(2)
Land Transfer Tax (LTT)
A provincial tax paid by the buyer when a property changes hands. Rates and rules vary significantly by province. Ontario and BC have the highest rates.
Try the Land Transfer Tax Calculator→GST and HST
Federal consumption taxes on most goods and services. GST is 5%; HST combines federal and provincial sales tax in certain provinces for a combined rate of 13% to 15%.
Try the Land Transfer Tax Calculator→Savings and Registered Accounts(5)
RRSP (Registered Retirement Savings Plan)
A tax-sheltered retirement savings account where contributions reduce your taxable income and investments grow tax-deferred until withdrawal.
Try the RRSP Calculator→TFSA (Tax-Free Savings Account)
A registered Canadian savings account where contributions are after-tax but all growth and withdrawals are completely tax-free.
Try the TFSA Calculator→RESP (Registered Education Savings Plan)
A tax-sheltered account for saving for a child's post-secondary education, boosted by the federal Canada Education Savings Grant (CESG).
Try the RRSP Calculator→FHSA (First Home Savings Account)
A new registered account (introduced 2023) combining RRSP and TFSA benefits: contributions are tax-deductible and qualifying withdrawals for a first home are tax-free.
Try the TFSA Calculator→RRIF (Registered Retirement Income Fund)
An account you convert your RRSP into by December 31 of the year you turn 71. Provides a regulated annual income stream in retirement, with minimum withdrawals taxed as income.
Try the RRSP Calculator→Income and Pay(2)
CPP and QPP
Mandatory public pension contributions deducted from employment income. CPP applies in all provinces except Quebec, which operates the equivalent QPP.
Try the Take-Home Pay Calculator→Employment Insurance (EI)
Mandatory federal insurance providing temporary income replacement for workers who lose their jobs, become ill, or take parental leave. Premiums are deducted from every paycheque.
Try the Take-Home Pay Calculator→Need to calculate something? Visit the Canadian calculators hub for our full suite of free Canadian financial tools, or browse the US financial glossary for American financial terms.