Mortgage Affordability Calculator

Q: What is the minimum down payment I can make?

In Canada , as per the Federal Department of Finance , as of December 15, 2024, home buy ers must make a minimum down payment of 5% on the first $500,000 of their home’s purchase price, and then 10% on the remaining portion between $500,001 and $1.5 million. Home buyers must make a 20% down payment on properties priced at $1.5 million or more. Read more: New insured mortgage maximum extended to $1.5 million

Q: When I use the calculator, why does the Land Transfer Tax (LTT) line item change if I toggle to the First-Time Home Buyer option?

If you select the “ first-time home buyer ” option, the calculator applies the appropriate federal and provincial rebates available to first-time home buyers, resulting in a lower land transfer tax amount.

Q: What is the Estoppel certificate fee?

The Estoppel certificate fee is commonly known as a "condo status certificate". It is issued by the condominium corporation as part of the due diligence process when purchasing a condominium, and essentially gives you an overview of the status of the condo unit and the corporation to allow you to make an informed decision.

When searching for a new home, the first step is to figure out how much you can afford. Ratehub.ca takes the most important factors like your income and expenses and determines the maximum purchase price that you can qualify for with our mortgage affordability calculator.

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Ratehub.ca’s mortgage affordability calculator

Calculate your maximum affordability

Your gross income before-tax, including any bonuses and supplementary income.

Your income

Co-applicant's income

(Optional)

If you don't know these costs, leave the fields blank and we will estimate for you.

Annual property tax

Monthly condo fees

Monthly heating costs

(Optional)

Enter debt payments if applicable. If you have none, you can leave blank.

Credit card debt payment

Car payment

Other loan expenses

Build your personalized mortgage scenario to determine your mortgage payment

WATCH: 2025 mortgage rule changes for homebuyers

WATCH: How to take advantage of future lower rates

Frequently Asked Questions

How do I calculate my affordability?

Your mortgage affordability depends on more than just fitting monthly payments into your budget. Lenders assess several key factors, including the total income of all mortgage applicants, current debts (like car payments, daycare costs, credit cards), and the recurring expenses of homeownership (such as utilities, property taxes, and condo fees). Here are the two debt service ratios that come into play:

Gross debt service (GDS) ratio: This measures your mortgage principal, interest, property taxes, and heating costs divided by your total annual income. As a rule of thumb for mortgage qualification, your GDS ratio should be in a range of between 32 - 39%.
Total debt service (TDS) ratio: This goes further by factoring in all monthly debt payments like credit cards, car payments and loan expenses, alongside your housing expenses, again divided by your annual income. Your TDS typically should range between 40% and 44%.

These metrics, combined with other elements such as your credit score, will help your lender determine how much mortgage you can afford.

Also read: How your credit score affects your mortgage.

What is the minimum down payment I can make?

In Canada, as per the Federal Department of Finance, as of December 15, 2024, home buyers must make a minimum down payment of 5% on the first $500,000 of their home’s purchase price, and then 10% on the remaining portion between $500,001 and $1.5 million. Home buyers must make a 20% down payment on properties priced at $1.5 million or more.

Read more: New insured mortgage maximum extended to $1.5 million

What is mortgage default insurance?

Mortgage default insurance is mandatory for any home buyer who puts down less than 20%, often called a “high-ratio” borrower. This coverage is often also referred to as CMHC insurance, as the Crown Corporation has historically been the predominant provider of this coverage. The other two providers of mortgage insurance in Canada are Canada Guaranty and Sagen.

This insurance typically costs between 2.8% and 4% of your total mortgage amount. By backing lenders against the risk that a borrower could default on their mortgage, default insurance makes it easier for higher-risk borrowers to qualify for mortgages (and often at lower rates).

Instead of paying it upfront, the insurance premium is added to your monthly mortgage payments from the start of your loan term. This additional expense increases your total cost of borrowing. You may be able to buy a home sooner and with a smaller down payment, but the added insurance premium directly impacts your monthly mortgage affordability.

Also read: Insured vs. uninsured mortgages

How much mortgage can I afford?

Let’s use the Affordability Payment Calculator above to determine a buyers’ maximum affordability in this scenario.

Assuming you have an annual income of $100,000 and can make a down payment of $50,000 with a maximum amortization of 25 years. Based on these parameters, you can afford a potential home price of $456,441. After applying the down payment, the required mortgage amount would be $419,041, which includes $12,600 in CMHC insurance premiums (added to the mortgage because the down payment is below 20%).

Now, if you qualify for a 5-year fixed mortgage rate of 4.04%, your monthly payment would be approximately $2,213.

When I use the calculator, why does the Land Transfer Tax (LTT) line item change if I toggle to the First-Time Home Buyer option?

What is the Estoppel certificate fee?

How much mortgage can I get with a $70,000 salary?

A buyer's income is just one part of the mortgage affordability equation. Lenders also consider other factors, such as the size of your down payment, your debt obligations, and your credit profile. Let’s explore two scenarios using a $70,000 annual salary and our Mortgage Affordability Calculator.

Scenario 1: Single applicant
Suppose the buyer earns $70,000 annually, has no co-applicant, and has saved $21,000 for a down payment (30% of their gross annual income—a commonly used benchmark for housing costs). Assuming a 25-year amortization period, this buyer could qualify for a home with a maximum purchase price of $320,571.

Scenario 2: Two co-applicants
Now, let’s assume there are two co-applicants, each earning $70,000, with a combined household income of $140,000 and a total down payment of $42,000. Using the same assumptions, these buyers could afford a home priced up to $645,846.

These calculations assume the property is located in Toronto, ON.

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Guide to mortgage affordability

Jamie David, Sr. Director of Marketing and Mortgages

January 14, 2025

Why calculate mortgage affordability?

When you're looking to buy a home, it's handy to know how much you can afford. Being able to calculate an estimate of how much you're able to borrow is an important part of setting your budget.

“How much house can I afford?” is a common question when starting the property hunt; you also need to determine if you have enough cash resources to purchase a home. The cash required is derived from the down payment put towards the purchase price, as well as the closing costs that must be incurred to complete the purchase. We can help you estimate these closing costs with the Cash Needed tab under the mortgage affordability calculator above.

Taken together, understanding how large a mortgage you can afford to borrow and the cash requirements involved will help you determine what kind of home you should be searching for.

December 2024 Canadian mortgage affordability update

Falling interest rates throughout autumn improved home affordability across Canada in November. According to Ratehub.ca's latest Affordability Report, the income required to qualify for a mortgage on the average home decreased in 12 out of 13 cities. This was fueled by four Bank of Canada rate cuts between June and October, reducing the Overnight Lending Rate by a total of 125 basis points. As a result, the average five-year fixed mortgage rate dipped slightly to 4.81%, lowering the mortgage stress test threshold to 6.81%.

Halifax saw the largest affordability boost, with the required income dropping by $2,370 due to an $11,500 decline in the average home price to $527,700. Regina and Hamilton followed closely, with income requirements falling by $1,460 and $1,130, respectively.

In contrast, larger markets like Toronto and Vancouver experienced more modest improvements in home affordability as buyer demand surged in response to lower rates. Vancouver’s average home price ticked up by $100, while Toronto’s increased by $1,500.

Looking ahead, further rate cuts expected in 2025 could continue to improve affordability. However, rising buyer activity and limited new listings may create challenges in maintaining these gains.

What is mortgage affordability?

Mortgage affordability refers to how much you’re able to borrow based on your current income, debt and living expenses. It’s essentially your purchasing power when buying a home. The higher your mortgage affordability, the more expensive a home you can afford to purchase.

The term ‘affordability’ is also used to describe overall housing affordability, which has more to do with the cost of living in a particular city. If the cost of housing relative to the average income in a city is high, it will be seen as a less affordable place to live. The two terms are related, but it’s important to understand the difference.

There are many factors that will affect the maximum mortgage you can afford to borrow, including the household income of the applicants purchasing the home, the personal monthly expenses of those applicants (car payments, credit expenses, etc.) and the expenses associated with owning a home (property taxes, condo fees and heating costs, etc.).

How much can I afford?

How much you can afford to spend on a home in Canada is primarily determined by how much you can borrow from a mortgage provider. That is, unless you have enough cash to purchase a property outright, which is unlikely. Use the mortgage affordability calculator above to figure out how much you can afford to borrow based on your current situation.

How to use the mortgage affordability calculator

To use our mortgage affordability calculator, simply enter your and your co-applicant’s income (if applicable), as well as your living costs and debt payments. The calculator can estimate your living expenses if you don’t know them.

With these numbers, you’ll be able to calculate how much you can afford to borrow. You can also change your amortization period and mortgage rate to see how that would affect your mortgage affordability and your monthly payments.

How to estimate affordability

There is a rule of thumb about how much you can afford, based on the calculations your mortgage provider will make. Your lender will use two debt ratios when determining whether you can afford a mortgage. These ratios are called the Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio. They take into account your income, monthly housing costs and overall debt load.

The first affordability guideline, as set out by the Canada Mortgage and Housing Corporation (CMHC), is that your monthly housing costs – mortgage principal and interest, taxes and heating expenses (P.I.T.H.) - should not preferably not exceed 32% of your gross household monthly income, up to a maximum of 39%. For condominiums, P.I.T.H. also includes half of your monthly condominium fees.

The second requires that your total debt load (which includes housing costs), totals no more than between 40% - 44% of your gross household income. In addition to housing costs, your total monthly debt load would include credit card interest, car payments and other loan expenses. The sum of your total monthly debt load as a percentage of your gross household income is your TDS ratio.

Maximum limits

While the general preferred guidelines for GDS and TDS are 32% and 40% respectively, most borrowers with good credit and steady income are allowed to qualify at the upper end of the debt-ratio thresholds.

The maximum GDS limit used by most lenders to qualify borrowers is 39% and the maximum TDS limit is 44%. Our mortgage calculator uses these maximum limits to estimate affordability.

On July 1st, 2020, the CMHC implemented new GDS and TDS limits for mortgages that it insured, with the new GDS limit for CMHC-insured mortgages becoming 35% and the new TDS limit for CMHC-insured mortgages becoming 42%. However, on July 5, 2021, these updated requirements for insured mortgages were reversed, and the GDS and TDS limits reverted to 39% and 44%, respectively.

Stay on top of your debt ratios: check out Ratehub.ca's credit card interest calculator

The CMHC changes had fairly minimal impact on borrowers, as Sagen and Canada Guaranty, the two other mortgage insurance providers in Canada, did not change their maximum limits. Consequently, mortgage lenders continued to use the old maximum GDS/TDS limits of 39/44 available through these other insurers. The main result of CMHC's temporary change in requirements was a major loss in market share, which is why the more stringent requirements were reversed in June 2021.

Down payment

Your down payment is a benchmark used to determine your maximum affordability. Ignoring income and debt levels, you can determine how much you can afford to spend using a simple calculation.

If your down payment is $25,000 or less, you can find your maximum purchase price using this formula:

Down Payment

÷ 5%

= Maximum Affordability

If your down payment is $25,001 or more, you can find your maximum purchase price using this formula:

(Down Payment Amount - $25,000)

÷ 10%

+ $500,000

= Maximum Affordability

For example, let's say you have saved $50,000 for your down payment. The maximum home price you could afford would be:

($50,000 - $25,000)

÷ 10%

+ $500,000

= $750,000

Any mortgage with less than a 20% down payment is known as a high-ratio mortgage, and requires you to purchase mortgage default insurance, often referred to as CMHC insurance (though, as noted above, mortgage default insurance is also provided by Sagen and Canada Guaranty).

Cash requirement

In addition to your down payment and mortgage default insurance, you should set aside 1.5% - 4% of your home's selling price to cover closing costs, which are payable on closing day. Many home buyers forget to account for closing costs in their cash requirements.

Other mortgage qualification factors

In addition to your debt service ratios, down payment and cash for closing costs, mortgage lenders will also consider your credit history and your income when qualifying you for a mortgage. All of these factors are equally important. For example, even if you have good credit, a sizeable down payment and no debts, but an unstable income, you might have difficulty getting approved for a mortgage.

Keep in mind that the mortgage affordability calculator can only provide an estimate of how much you'll be approved for, and assumes you’re an ideal candidate for a mortgage. To get the most accurate picture of what you qualify for, speak to a mortgage broker about getting a mortgage pre-approval.

How to increase your mortgage affordability

If you want to increase how much you can borrow, thus increasing how much you can afford to spend on a home, there are few steps you can take.

1. Save a larger down payment: The larger your down payment, the less interest you’ll be charged over the life of your loan. A larger down payment also saves you money on the cost of mortgage default insurance.

2. Get a better mortgage rate: Shop around for the best mortgage rate you can find, and consider using a mortgage broker to negotiate on your behalf. A lower mortgage rate will result in lower monthly payments, increasing how much you can afford. It will also save you thousands of dollars over the life of your mortgage.

3. Increase your amortization period: The longer you take to pay off your loan, the lower your monthly payments will be, making your mortgage more affordable. However, this will result in you paying more interest over time.

These are just a few ways you can increase the amount you can afford to spend on a home, by increasing your mortgage affordability. However, the best advice will be personal to you. Find a licensed mortgage broker near you to have a free, no-obligation conversation that’s tailored to your needs and free of charge.

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