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, required monthly debt payments, down payment, mortgage rate, amortization, property tax, heating and condominium fees. It compares debt-service capacity with the purchase price supported by the entered down payment.

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 required monthly 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. The qualifying rate is 6.50% because the contract rate plus two percentage points is above the 5.25% floor.

Enter those assumptions and select Calculate estimate. Read the debt-service result and the down-payment-supported result separately; the lower figure is the useful planning limit. Then rerun the scenario with a higher rate or larger property-tax amount to see which assumption is driving the result.

Frequently asked questions