What Can I Afford?

"How much house can I buy?" is really three questions: what will a lender approve, what fits the debt-ratio rules, and what fits your life. This calculator answers the first two. It applies the stress test and the GDS/TDS ceilings to your income, debts, and down payment, returning the maximum mortgage — and therefore the maximum price — the rules allow.

What it answers, and what it doesn't

It answers: the largest mortgage you qualify for under the stress test at this calculator's 32% GDS / 40% TDS thresholds — applied to the mortgage payment alone — translated into a purchase price given your down payment. That is a simplified ceiling built for comparing scenarios, not a lender's underwriting decision.

It does not answer: whether you should spend that much, or exactly what a specific lender will approve. Real lender GDS also folds in property tax, heat, and half of any condo fees on top of the mortgage payment — this calculator deliberately leaves those out and qualifies on the payment alone (see the assumptions above the calculator), so the real number a lender offers you is very likely lower than what you see here. It also ignores income tax, childcare, retirement savings, and the rest of your paycheque, the CMHC premium's effect on your borrowing power, and the 1.5% closing-cost proof insurers require on top of your down payment. Treat the output as a rough, payment-only ceiling, then get a real pre-approval before relying on it.

Every input, explained

Gross household income. Use base salary plus only the bonus or overtime your lender will count — usually a two-year average, not last year's windfall. The common error is entering take-home pay, which understates your borrowing power by 25–30%.

Down payment. What you will actually put down, from acceptable sources: savings, investments, a signed gift letter from immediate family, sale proceeds, FHSA or HBP funds. Borrowed money is accepted by some lenders above 5%, but the repayment counts in your debt ratios and shrinks what you qualify for.

Debts and monthly obligations. Car loans, student loans, credit card minimums, lines of credit — every recurring payment. People consistently forget the car lease and the buy-now-pay-later balance. TDS adds all of these to housing costs, so a $600 car payment can erase $100,000+ of borrowing power.

Contract interest rate. Your best-guess mortgage rate, used as the base for the stress test. The calculator qualifies you at this rate plus two points (or the 5.25% floor, whichever is higher).

Amortization (years). How many years the qualifying payment is spread over — 25 by default, adjustable up to 35 here. A longer amortization lowers the monthly payment the stress test checks, which raises the maximum mortgage; real insured mortgages cap amortization at 25 years unless you're a first-time buyer or buying newly built construction, where 30 years is available.

How the math works

The calculator runs two ceilings on the mortgage payment alone and takes the lower one: GDS caps the payment at 32% of gross monthly income; TDS caps it at 40% of gross monthly income minus your other debts. Whichever ceiling is lower is the maximum monthly mortgage payment allowed. The calculator then converts that payment into a loan amount at the stress-test rate (your contract rate plus 2 percentage points, or 5.25%, whichever is higher) over your chosen amortization, and adds your down payment to get the maximum price. Real lender GDS/TDS also add property tax, heat, and condo fees on top of the payment — this calculator's 32%/40% payment-only version is a disclosed simplification, so treat the result as an upper bound, not a quote.

Worked example: $150,000 household income, $500/month in debts, $70,000 down

Monthly gross income: $150,000 ÷ 12 = $12,500.

GDS ceiling: 32% × $12,500 = $4,000 per month for the mortgage payment. TDS ceiling: 40% × $12,500 = $5,000, minus $500 in debts = $4,500 for the payment.

GDS binds (it is the lower number): the calculator caps the mortgage payment at $4,000/month.

Now the stress test. At a 4.49% contract rate, the qualifying rate is the higher of 4.49% + 2% = 6.49% and the 5.25% floor, so 6.49%. The monthly rate is (1.03245)^(1/6) − 1 = 0.0053366.

Maximum mortgage over 300 payments (25 years): $4,000 × (1 − (1.0053366)^-300) ÷ 0.0053366 = $597,713 (rounded). Add the $70,000 down payment: maximum purchase price = $667,713. Notice the $500 debt payment never bound here — TDS ($4,500) stayed above GDS ($4,000) — but raise the debts enough and TDS takes over instead.

Provincial quirks and edge cases

The stress test is federal, but credit unions play by choice. Provincially regulated credit unions are not bound by OSFI's B-20, though most apply a similar test. If a bank declines you at the stress-test rate, a credit union is not automatically an easier yes — their internal policy decides, not federal law.

Renewals and straight switches skip the test. Renewing with your current lender needs no re-qualification, and since November 2024 a straight switch to another lender on an uninsured mortgage skips it too. The ceiling this calculator computes matters at purchase and refinance, not at renewal.

The 30-year amortization changes the answer. First-time buyers and new-build buyers qualifying with a 30-year insured amortization get a lower payment for the same loan, which lowers the qualifying income needed by roughly the same 9% the payment drops. This calculator has an amortization input — try both 25 and 30 to see the difference.

A real lender's number will be lower. Because this calculator qualifies on the mortgage payment alone, any property tax, heat, or condo fees a lender would add to GDS/TDS are not subtracted here — so the maximum price above is a ceiling on the simplified rule, not a promise of approval at that amount.

Questions to ask your mortgage broker

1. Which of my income sources will you actually count, and do you need a two-year average for any of them?
2. At my income and debts, which ratio binds first — GDS or TDS — and how close am I to the ceiling?
3. Would a 30-year amortization change my approval, and do I qualify for one on this purchase?
4. How much will my approval drop if rates rise half a point before I buy, and how long is my pre-approval rate hold?