How Much House Can I Afford in Canada?

Start with gross household income

Mortgage affordability calculations normally begin with gross income before income tax. For a two-income application, combine the income that a lender is prepared to verify. A quick estimate cannot decide whether commissions, bonuses, overtime, rental income or self-employment income will be accepted.

• 1Use annual gross income—not take-home pay.
• 1Keep irregular income separate until a lender confirms its treatment.
• 1Do not treat an online estimate as a pre-approval.

Housing costs are more than the mortgage

A useful estimate includes the mortgage payment, property taxes, heating and, for a condominium, a portion of condo fees. These costs influence the gross debt service ratio even though they are not all paid to the mortgage lender.

• 2Mortgage principal and interest
• 2Property taxes and heating
• 2Usually 50% of condominium fees in the ratio

Example: identify the limiting factor

Suppose a household earns $120,000, pays $500 a month toward other debts and has $60,000 available for a down payment. The calculator first estimates the mortgage supported by the GDS/TDS limits, then checks whether the down payment supports that purchase price. The lower result becomes the planning estimate.

Keep closing costs outside the down payment. Government of Canada guidance suggests buyers prepare separately for upfront costs such as legal fees, inspection, title insurance and property-tax adjustments.

What the calculator includes—and what it leaves out

The ToolsFA estimate combines gross household income, monthly debt obligations used for qualification, down payment, mortgage rate, amortization, monthly property tax, heating and condominium fees. It compares debt-service capacity with the purchase price supported by the entered down payment. Enter the full condo fee: the calculator counts half when testing the ratios.

It does not assess credit history, employment documentation, lender policy, mortgage-insurance eligibility, appraisal results or a property's condition. It also does not add a mortgage-insurance premium or closing costs to the loan. Those exclusions are why the result is a planning ceiling rather than an approval.

Worked scenario: $120,000 household income

Assume $120,000 of verified annual gross income, $500 of monthly qualifying debt payments, a $60,000 down payment, a 4.50% contract rate, a 25-year amortization, $6,000 of annual property tax, $150 of monthly heating and no condo fees. Enter $500—not $6,000—in Monthly property tax. Leave the stress-test box selected: the qualifying rate is 6.50%.

Gross monthly income is $10,000. The 39% GDS ceiling allows $3,900 of housing costs; the 44% TDS ceiling less $500 of debts also allows $3,900. Subtract $500 tax and $150 heat to leave $3,250 for the qualifying mortgage payment. Using the tool's monthly-rate calculation, that supports about $481,334 of mortgage, or a $541,334 purchase after the down payment. The down payment alone supports $850,000 under the standard tiers, so income and debt bind first. Insurance premiums and closing costs remain excluded.

The displayed $3,250 mortgage payment is calculated at the 6.50% test rate. It is not a quote for the payment at the 4.50% contract rate. Raising monthly property tax by $100 leaves $100 less payment room; rerun the tool to see the lower purchase-price result.

Turn a qualification ceiling into a household budget

The ratio test uses gross income and a limited set of costs; it does not show what remains in your bank account after tax. Build a second monthly budget using take-home income and a lender's contract-payment quote. Include the full condo fee, home insurance, maintenance, utilities, transport, childcare, food, debt payments and savings. Do not count property tax twice if the lender collects it with the mortgage payment.

For a condo with $600 monthly fees, only $300 enters this calculator's ratio allowance, but the household still pays $600. A satisfactory ratio therefore does not prove that the full cost fits your lifestyle. If the cash budget needs a lower purchase price than the tool's ceiling, use the lower amount.

Set aside your cash-at-closing reserve with the closing-cost checklist →

Frequently asked questions