How much mortgage can you afford in Canada?
Canadian mortgage affordability depends on gross household income, existing debt payments, property tax, heating, condo fees, the down payment and the mortgage stress test. This calculator applies both gross debt service and total debt service limits, then checks whether available cash supports the estimated purchase.
The result is a planning estimate, not a pre-approval. A lender will verify documents, credit, the property and the source of the down payment before deciding how much it will lend.
How the Canada mortgage affordability calculator works
The calculator first determines the qualifying interest rate: the greater of 5.25% or the entered contract rate plus two percentage points. It uses Canadian semi-annual compounding to estimate the qualifying mortgage payment and converts that payment capacity into a mortgage amount over the selected amortization.
Housing costs are limited by the selected GDS ratio. Mortgage payments plus property tax, heating and 50% of condo fees are included. The TDS calculation adds monthly debt obligations. The lower payment capacity determines the estimated mortgage.
Gross debt service
GDS measures qualifying housing costs as a percentage of gross household income. CMHC uses a 39% maximum in its standard insured-mortgage calculation.
Total debt service
TDS adds other required debt payments to qualifying housing costs. CMHC uses a 44% maximum, subject to the overall strength of the application.
Mortgage stress test
Federally regulated lenders generally qualify borrowers at the higher of 5.25% or the contract rate plus 2%, for insured and uninsured mortgages.
Personal monthly budget
Passing simplified GDS and TDS limits does not mean a payment fits your lifestyle. The calculator separately shows take-home income remaining after entered costs.
Down payment, mortgage insurance and cash to close
A down payment below 20% generally requires mortgage default insurance for an eligible purchase. The premium is commonly added to the mortgage and therefore affects the payment and debt-service ratios. Homes priced at $1.5 million or more are not eligible for insured financing and require at least 20% down in this calculator.
Closing costs are separate from the down payment. Land transfer tax, legal fees, appraisal or inspection costs, adjustments and moving expenses vary by province, municipality and purchase. Keep an emergency reserve instead of assuming every saved dollar can be used at closing.
Canadian mortgage qualification guidance
The current stress-test formula is published by the Office of the Superintendent of Financial Institutions and explained for consumers by the Financial Consumer Agency of Canada. CMHC explains the GDS and TDS calculation.
Use the target-home section to compare a specific price and down payment. For the resulting payment schedule and overpayment scenarios, use the Canada mortgage calculator.
Canada mortgage affordability questions
What mortgage rate is used for the Canadian stress test?
Federally regulated lenders generally use the higher of 5.25% or the mortgage contract rate plus two percentage points.
What are GDS and TDS?
GDS compares qualifying housing costs with gross income. TDS adds other monthly debt obligations. They are underwriting ratios rather than personal spending targets.
How much income do I need for a mortgage?
It depends on the mortgage amount, qualifying rate, amortization, property costs and other debts. The target-home check estimates the gross annual income needed under the entered GDS and TDS limits.
Does a bigger down payment improve affordability?
Usually. It reduces the base mortgage and may reduce or eliminate the default-insurance premium. However, money reserved for closing and emergencies should not be counted twice.
Does this result mean I will qualify?
No. A lender will assess verified income, credit, debts, down-payment sources, property valuation and its own policies.
Why is my personal budget lower than the lender ratio limit?
GDS and TDS use gross income and defined obligations. Your take-home budget also needs to cover food, transportation, childcare, utilities, maintenance and discretionary spending.