How Much Mortgage Can I Afford?
Use the GDS/TDS rules that Canadian lenders actually use to qualify you. See the maximum home price for your income, understand stress-test requirements, and calculate your true affordability range.
Quick Answer
Rule of thumb:
4–5× your income
$100k salary → ~$400k–$500k home
Lender max (GDS rule):
32% of gross income
Housing costs ÷ monthly income
Calculate Your Mortgage Payment
Enter your target home price to see if the monthly payment fits within your affordability range.
The Two Rules Lenders Use
Your housing costs (mortgage P&I + property tax + heating + 50% of condo fees) divided by your gross monthly income.
Maximum allowed: 32%
Example: $8,333/mo income × 32% = $2,667/mo max housing cost
All your debt payments (housing costs + car loans + credit card minimum payments + student loans) divided by gross monthly income.
Maximum allowed: 44%
Example: $8,333/mo income × 44% = $3,667/mo max total debt
Affordability by Income Level
Maximum home price based on 32% GDS rule, 5% interest rate, 25-year term, and 20% down payment. These are lender qualification limits — your comfort level may be lower.
| Annual Income | Max Housing/mo | Max Mortgage | Max Home Price |
|---|---|---|---|
| $60,000/yr | $1,600/mo | $272,000 | $340,000 |
| $75,000/yr | $2,000/mo | $340,000 | $425,000 |
| $100,000/yr | $2,667/mo | $453,000 | $566,000 |
| $120,000/yr | $3,200/mo | $544,000 | $680,000 |
| $150,000/yr | $4,000/mo | $680,000 | $850,000 |
| $200,000/yr | $5,333/mo | $907,000 | $1,134,000 |
Assumes 5% interest rate, 25-year amortization, 20% down payment, $5,000/yr property tax, $1,500/yr insurance, no other debts. Numbers are pre-stress-test.
The Mortgage Stress Test Reduces Your Maximum
Canadian lenders must qualify you at the higher of 5.25% or your contract rate + 2%. This means if your rate is 5%, you qualify at 7% — reducing what you can borrow by roughly 18%.
Without stress test
At 5% rate — $100k income can qualify for a $566k home
With stress test (reality)
Qualified at 7% — $100k income actually qualifies for a ~$470k home
What Affects Your Affordability?
Down Payment
A larger down payment directly increases your buying power. Going from 5% to 20% down eliminates CMHC insurance (2.8–4% of loan) and lowers your monthly payment, allowing you to qualify for a higher-priced home.
Existing Debts
Every $500/month in car payments, student loans, or credit card minimums reduces your mortgage affordability by roughly $60,000–$80,000. Paying off debts before applying significantly increases your borrowing room.
Credit Score
A score above 680 typically gets you the best rates. Scores below 600 may require a B-lender at 1–3% higher rates, which reduces affordability by 10–20%.
Interest Rate
A 1% rise in rates reduces affordability by roughly 8–10%. At 4%, a $100k income qualifies for ~$610k. At 6%, that drops to ~$530k.
Frequently Asked Questions
Using the 32% GDS rule at 5% interest with a 25-year term and 20% down, a $100k income qualifies for roughly a $566k home ($453k mortgage). After the stress test at 7%, this drops to approximately $470k. The general rule of thumb is 4–5x your annual income.
GDS (Gross Debt Service) ratio is your monthly housing costs divided by your gross monthly income. Canadian lenders cap this at 32%. Housing costs include mortgage P&I, property tax, heating, and 50% of condo fees. If your GDS exceeds 32%, you won't qualify for an insured mortgage — regardless of your income.
Yes — since 2018, the stress test applies to all federally regulated lenders in Canada (banks, credit unions in some provinces). You must qualify at the higher of 5.25% or your contract rate + 2%. Private lenders and some credit unions may not apply the stress test, but typically charge higher rates.
For a $800,000 home with 20% down ($160k), your mortgage is $640k. At 5% over 25 years, the monthly P&I is about $3,737. Adding $500/mo property tax and $125/mo insurance, total housing cost = ~$4,362/mo.
Using the 32% GDS rule: $4,362 ÷ 0.32 = $13,631/month gross income needed, or roughly $163,500/year. After the stress test, you'd need closer to $185,000/year.
Most financial advisors recommend staying well under your maximum qualification. Banks approve you for the absolute ceiling — but that ceiling often leaves little room for emergencies, home repairs, or lifestyle expenses. A common guideline is to target no more than 3.5–4x your income and keep total housing costs at 25–28% of gross income rather than the 32% maximum.