Mortgages
How Much Mortgage Can I Afford in Canada?
Lenders limit housing costs to about 39% of your gross income and all debts to 44%, tested at the stress-test rate. Example maximum mortgages by income, and how debts and down payments change them.
How do lenders decide how much I can borrow?
With two debt service ratios. Gross debt service (GDS): housing costs, meaning the mortgage payment, property tax, heating and half of any condo fees, up to 39% of gross income for an insured mortgage. Total debt service (TDS): housing plus all other debt payments, up to 44%.
Lenders may set their own limits for uninsured mortgages, but these are the common benchmarks.
Put it into practiceMortgage affordability calculatorWhich interest rate is used?
The stress-test rate: the higher of 5.25% or your contract rate plus 2 percentage points. At a 4.50% contract rate, you qualify at 6.50%, which lowers the maximum you can borrow.
How much can I borrow on my income?
Example maximum mortgages, using the 39% GDS limit at 6.50%, a 25-year amortization, $450 a month for property tax and heat, and no other debts.
| Gross household income | Max housing costs per month | Max mortgage payment | Approximate max mortgage |
|---|---|---|---|
| Top$70,000 | $2,275 | $1,825 | $272,000 |
| $100,000 | $3,250 | $2,800 | $418,000 |
| $130,000 | $4,225 | $3,775 | $564,000 |
| $160,000 | $5,200 | $4,750 | $709,000 |
Add your down payment to the mortgage to get a rough maximum purchase price. These are arithmetic examples, not approvals; your lender looks at your full file.
How do car loans and credit cards change this?
Every monthly debt payment counts in TDS. When the debt ratio is what limits you, each $100 a month of other debt payments reduces your maximum mortgage by about $15,000 at a 6.50% qualifying rate over 25 years, which is why paying off a car loan before applying can matter.
Is the maximum what I should borrow?
Not necessarily. The ratios measure what a lender will allow, not what fits your life. Budget for maintenance, insurance, closing costs of roughly 1.5% to 4% of the price, and savings, and test your payment at a higher rate for renewal.
Keep reading
MortgagesThe Mortgage Stress Test in CanadaWhat the stress test is, how the qualifying rate is set, how it affects how much you can borrow, and when it doesn’t apply.
MortgagesDown Payments and CMHC Mortgage Insurance in CanadaThe minimum down payment for any price, what CMHC insurance costs with less than 20% down, and where your down payment can come from.
MortgagesWhat Credit Score Do You Need for a Mortgage in Canada?For an insured mortgage with less than 20% down, CMHC requires at least one borrower to have a credit score of 600 or more. What lenders look for beyond the score, and what to do if yours is lower.
MortgagesHow Mortgages Work in CanadaWhat a mortgage is, the difference between term and amortization, how payments are calculated and what else you pay when you buy.
Official sources and further reading
- OSFI: Minimum qualifying rate for uninsured mortgages ↗
- CMHC: Requirements for mortgage loan insurance ↗
- FCAC: Buying a home ↗
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value