How this Mortgage Affordability Calculator works
This calculator estimates a rough maximum home price and mortgage amount you might qualify for in
Canada. It uses your gross household income, housing costs and monthly debt payments to see what
mortgage payment fits inside common Gross Debt Service (GDS) and Total Debt Service (TDS) limits.
It also applies Canadian-style minimum down payment rules and adds an estimate of mortgage default
insurance when your down payment is under 20%.
In simple terms, the calculator looks at how much room you have in your monthly budget for a mortgage
payment after covering property tax, heating, a share of condo fees and any other debt, and then turns
that “room” into an estimated maximum mortgage amount using a stress-test interest rate and your chosen
amortization period.
How CRA evaluates your income
When assessing affordability or net income, the Canada Revenue Agency (CRA)
considers your gross employment income, mandatory payroll deductions such as
CPP and EI, and your tax residency status.
This calculator provides an estimate based on current federal and provincial
tax rules, but actual CRA assessments may vary depending on your situation.
What are GDS and TDS?
Canadian lenders often use two key ratios to test affordability:
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Gross Debt Service (GDS) – your core housing costs compared to your gross income.
It usually includes your mortgage payment (principal & interest), property taxes, heating and
50% of condo fees. For many insured mortgages, the typical maximum GDS used is
around 39% of gross income.
-
Total Debt Service (TDS) – your housing costs plus all other monthly
debt payments (credit cards, car loans, lines of credit, etc.) compared to gross income. A common
maximum TDS used in Canada is around 44% of gross income.
If your GDS or TDS are too high, a lender may reduce the size of the mortgage they're willing to offer
or decline the application altogether. This is why high housing costs or heavy debt can make it
difficult to qualify, even with a good income.
What is a credit score and why does it matter?
Your credit score is a three-digit number (in Canada typically ranging from
300 to 900) that summarizes how reliably you've handled credit in the past.
Mortgage lenders use it to judge how risky it is to lend to you: a higher score usually means
better chances of approval and access to lower interest rates.
Many mainstream lenders and brokered “A-lenders” often look for a score around
680 or higher for their best-priced conventional or insured mortgages, although
some CMHC-insured programs may accept scores from around 600+. Requirements vary by
lender, product type and down payment size.
How to improve your credit score (quick tips)
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Pay every bill on time. Payment history is one of the biggest factors. Even one
late payment can hurt your score.
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Keep credit utilization low. Try to use less than about 30% of your available
credit limits across cards and lines of credit, and avoid maxing out cards for long periods.
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Avoid too many new applications at once. Several “hard checks” in a short time
can temporarily drag your score down.
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Keep older accounts in good standing. A longer, stable credit history is
usually viewed more positively than a very short one.
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Work down high-interest debts. Reducing credit card and other high-interest
balances can improve both your TDS ratio and your score over time.
Why it's important to run the numbers
A quick affordability check helps you avoid looking at homes that are likely beyond your budget and
shows how much of your income would go toward housing and debt. It also gives you a concrete starting
point for conversations with lenders, brokers and real estate agents, so you can focus on properties
that match both your goals and your financial comfort zone.
Remember that this calculator is an estimate only. Each lender can apply its own rules for income,
down payment sources, credit score and property type, so a pre-approval or full application is the
best way to understand your exact borrowing power.
Frequently Asked Questions (FAQs)
How much house can I afford with my income?
A general rule is that your total housing costs should not exceed 32-39% of your gross monthly income
(GDS ratio). For example, with an annual income of $90,000 ($7,500/month), lenders typically allow
up to about $2,340-$2,925 per month for housing costs including mortgage payments, property taxes,
heating and half of condo fees.
What is the minimum down payment required in Canada?
The minimum down payment in Canada depends on the home price: 5% for homes up to $500,000;
5% on the first $500,000 plus 10% on the amount above $500,000 up to $999,999; and 20% for homes
priced at $1 million or more. Properties over $1 million cannot have CMHC insurance.
What is the mortgage stress test?
The mortgage stress test requires borrowers to qualify at either the Bank of Canada's 5-year
benchmark rate or their contract rate plus 2%, whichever is higher. This ensures you can still
afford payments if interest rates rise. Even if you secure a 3% rate, you must qualify at around
5% or higher.
What is CMHC insurance and when is it required?
CMHC (Canada Mortgage and Housing Corporation) insurance is required when your down payment is
less than 20% of the home price. The insurance premium ranges from 0.6% to 4% of the mortgage
amount depending on your down payment size, and it's typically added to your mortgage balance
rather than paid upfront.
How do my debts affect how much I can borrow?
Lenders use the Total Debt Service (TDS) ratio, which includes your housing costs plus all
monthly debt payments (credit cards, car loans, student loans, etc.). The maximum TDS is
typically 44% of gross income. High debt payments reduce the mortgage amount you qualify for
because they leave less room in your budget for housing costs.
Can I use a 30-year amortization?
A 30-year amortization is only available for uninsured mortgages (down payment of 20% or more).
If your down payment is less than 20% and you need CMHC insurance, the maximum amortization is
25 years. Longer amortization periods lower monthly payments but increase total interest paid
over the life of the mortgage.
What credit score do I need to get a mortgage in Canada?
Most mainstream lenders prefer a credit score of 680 or higher for their best rates. CMHC-insured
mortgages may accept scores around 600 or above, though requirements vary by lender. A higher
credit score generally gives you access to better interest rates and more favourable terms.
How accurate is this mortgage affordability calculator?
This calculator provides a reasonable estimate based on common lending guidelines in Canada, but
it's not a guarantee of approval. Actual mortgage amounts depend on your specific lender's policies,
your complete financial profile, property type, location and current interest rates. Always get a
pre-approval from a lender or mortgage broker for an accurate assessment.
