How Much Mortgage Can I Afford in Canada? (2025 Guide + Calculator)

What “Mortgage Affordability” Actually Means in Canada

How Lenders Decide Your Maximum Mortgage (GDS, TDS, and the Stress Test)

In Canada, most lenders don’t just ask “What’s your salary?”. They run your numbers through a few key rules:

1. GDS – Gross Debt Service ratio

This is the share of your income that goes to housing costs only.

Roughly:

GDS = (Mortgage payment + Property taxes + Heating + 50% of condo fees) ÷ Gross income

Typical guideline for many prime/insured lenders:

• GDS around 39% or less

2. TDS – Total Debt Service ratio

This is the share of your income that goes to housing + all other debts.

TDS = (PITH* + Other debt payments) ÷ Gross income

*PITH = Principal, Interest, Taxes, Heating (and a portion of condo fees)

Typical guideline:

• TDS around 44% or less for many prime/insured files

Individual lenders and insurers may be a bit tighter or a bit more flexible depending on your credit, down payment, and file strength.

3. The Canadian mortgage stress test

Federally regulated lenders (the big banks and most mainstream players) must “stress test” your mortgage. That means they qualify you at a higher rate than your actual contract rate.

As of 2025, the minimum qualifying rate is the higher of:

• Your contract rate + 2%, or
• 5.25%

So if your actual mortgage rate is 4.79%, you must qualify as if your rate were 6.79%.

This stress test reduces the amount you qualify for compared to using your actual rate, but it’s meant to protect both you and the lender if rates rise.

Key Inputs Lenders Care About: Income, Debts, Down Payment, and Property Costs

When a lender (or this calculator) estimates “how much you can afford,” it’s mainly looking at:

1. Your gross income

• Salary or hourly pay
• Part-time income
• Bonuses / commissions / overtime
• Self-employed / business income
• Rental income
• Pensions, support, and other fixed income

The big questions are:

• How much is it?
• How stable is it?
• How many years of history do you have?

2. Your debts and monthly payments

Lenders look at all ongoing obligations that will still exist after you buy:

• Credit cards & unsecured lines of credit
  • Often assumed at 3% of the outstanding balance per month as a payment (even if you actually pay less).
• Car loans and leases, personal loans, student loans
  • They usually use the actual monthly payment on the statement.
• HELOCs (Home Equity Lines of Credit)
  • Even though HELOCs are interest-only by design, many lenders treat them more like a mortgage in the ratios:
  • They’ll usually take the balance (or sometimes the limit),
  • Amortize it over ~25 years,
  • And calculate a payment at the lender’s qualifying rate.
• Support payments you pay (spousal/child support)
  • Count as ongoing expenses and reduce room in your TDS.

Every extra dollar of monthly payment eats into your TDS, and that directly reduces how much mortgage you can qualify for.

3. Your down payment

Your down payment affects:

• Whether you’re insured (<20% down) or uninsured (20%+ down)
• Which lenders and products you qualify for
• Your monthly payment (and therefore GDS/TDS)

A larger down payment:

• Lowers your mortgage amount
• Can open up more flexible programs
• May reduce the rate in some cases

4. Property costs (the “other” housing expenses)

Lenders estimate:

• Property taxes
• Heating (often a standard assumption per month)
• Condo/strata fees, if applicable

These costs are added to your mortgage payment for GDS/TDS purposes. A home with very high taxes or strata fees can reduce your maximum mortgage, even at the same price.

How Different Types of Income Are Treated for Mortgage Approval in Canada

Not all income is treated equally. Two people with the same “total income” on paper can qualify for very different mortgage amounts depending on how that income is earned and documented.

Salaried and Full-Time Income: T4s, Employment Letters, and Pay Stubs

For full-time salaried employees with guaranteed hours:

• Lenders generally rely on:
  • A recent pay stub showing year-to-date income
  • An employment letter confirming:
    • Your position
    • Full-time / permanent status
    • Base salary and any guaranteed hours
  • Sometimes previous T4s or NOAs for context

If the job is permanent and stable (and you’re past probation), they often use your current salary annualized as qualifying income.

If you’re still in probation, some lenders may not count your income yet, or may need extra comfort.

Part-Time Income: 2-Year Average vs Guaranteed Hours

Part-time income is usually more conservative:

• If your hours are not guaranteed:
  • Lenders often want 2 years of history.
  • They calculate a 2-year average from your tax returns/NOAs or T4s.
• If your hours are guaranteed in writing:
  • They may annualize based on:
    • Hourly rate × guaranteed hours per week × 52 weeks

Stability matters. If your hours or income fluctuate a lot year to year, lenders may take the lower average or discount it.

Bonus, Commission, and Overtime Income: Why Lenders Want a 2-Year Average

Variable income types include:

• Bonuses
• Commissions
• Overtime
• Shift premiums, tips, and similar

Because these can swing up and down, lenders typically:

• Want 2 years of history
• Take a 2-year average (and sometimes the lower of:
  • last year, or
  • 2-year average)

If your variable income is clearly trending down, lenders may use the lower number. If it’s stable or trending up, some lenders will be more generous.

Business Owners and Self-Employed: When You Need a Different Calculator

If you run a business, you’re in a different world from salaried borrowers.

Self-employed can include:

• Sole proprietors (T2125 – Statement of Business or Professional Activities)
• Incorporated owners who pay themselves:
  • Salary (T4)
  • Dividends (T5)
  • Or a mix of salary + dividends

Lenders may look at:

• 2–3 years of T1 Generals and NOAs
• Business financial statements
• Add-backs of non-cash or one-time expenses
• In some cases, a portion of corporate net income or retained earnings

The problem: if you work hard with your accountant to minimize taxable income, you can end up hurting your mortgage qualification.

Because this gets complex quickly, it’s usually better to use a self-employed-specific tool:

If you’re a business owner, incorporated professional, contractor, or freelancer, use my Self-Employed Mortgage Calculator for Canadian Business Owners for a more accurate picture.

Investment and Dividend Income: Using a 2-Year Average

Investment income can count, but lenders want to know it’s real and repeatable, not just a one-time gain.

They may include:

• Dividend income
• Interest income from investments or savings
• Certain recurring distributions

Common approach:

• Look at T5 slips and tax returns
• Take a 2-year average, assuming:
  • It’s consistent
  • The underlying assets are likely to continue generating similar income

Large one-off capital gains (e.g., from selling a property or big stock sale) usually don’t count as ongoing qualifying income.

Support, Pension, and Other Fixed Incomes

Some non-employment income can support your mortgage qualification if it’s well documented and likely to continue.

Child or spousal support received

Lenders may include it if:

• There’s a legal agreement or court order
• Payments have been consistent (often 3–6 or 12 months of bank statements)
• The support will continue for at least a few years into the future

Some lenders also prefer that support is not the majority of your total income.

Pensions and disability income

• CPP, OAS, employer pensions, long-term disability benefits:
  • Often treated as stable fixed income when backed by:
    • Award letters, and
    • Bank statements showing deposits

Other benefits

EI, short-term benefits, or social assistance may be handled more cautiously and are not always fully counted. It depends heavily on the type and duration.

Quick Canadian Mortgage Affordability Rules of Thumb

These rules don’t replace a calculator, but they give you fast, back-of-napkin estimates.

The 4–5× Income Rule in Canada (and When It Breaks Down)

A common Canadian rule of thumb:

Most borrowers qualify for somewhere around 4–5× their gross household income.

For example:

• $80,000 income → maybe $320,000–$400,000 mortgage
• $120,000 income → maybe $480,000–$600,000 mortgage

This assumes:

• Typical GDS/TDS guidelines
• Normal unsecured debts
• Standard rates and a 25- or 30-year amortization

It breaks down when:

• You have high non-mortgage debts (car loans, lines of credit, support payments)
• Property taxes or condo fees are very high
• You’re self-employed and show low taxable income
• You’re using alternative or B-lenders with different rules

Use it as a starting range, not as a promise.

The $550/Month ≈ $100,000 Borrowing Power Rule

Another useful shortcut:

Roughly every $550/month of payment equals about $100,000 of mortgage for many typical rate + amortization scenarios.

This isn’t exact, but it’s good for quick comparisons.

You can flip it around:

• Add a new $550 car payment?
  → You just lost roughly $100,000 of mortgage room.
• Free up $550/month by paying off a line of credit?
  → You may now qualify for about $100,000 more mortgage (all else equal).

Again, the real number will change with rate, amortization, and lender, but it’s an easy way to feel the impact of debt decisions.

How Credit Card and Line of Credit Balances Reduce What You Can Afford (The 3% Rule)

Most lenders don’t care what you plan to pay on a credit card or unsecured LOC.

They care what they must assume you could be required to pay.

A common assumption:

3% of the balance per month as a payment for unsecured credit cards and lines of credit.

So:

• $10,000 balance → assumed payment = $300/month
• $25,000 balance → assumed payment = $750/month

Now apply the $550 ≈ $100k rule:

• That $300/month reduces your mortgage room by roughly $50,000–$60,000
• That $750/month might cost you around $130,000–$150,000 in borrowing power

This is why paying down revolving debt can dramatically improve your approval.

“Bank Max” vs “Comfortable Payment” – How Much Should You Actually Borrow?

There’s a big difference between:

• The maximum a lender is willing to approve, and
• The payment that actually lets you sleep at night

Things your lender doesn’t fully see:

• Your business volatility
• Kids, daycare, and activities
• Travel, lifestyle, and savings goals
• Future plans (starting a business, parental leave, going back to school)

Use:

• This calculator to see your absolute ceiling, and
• Your own budget to decide what fits your life

Sometimes the best move is to aim below what the bank says you can afford.

How Much Mortgage Can I Afford on My Income? (Salary-Based Examples)

These examples are ballparks using typical Canadian guidelines. They’re not offers or guarantees, but they give you a sense of what’s realistic.

To keep things simple, assume:

• Standard GDS/TDS limits
• Typical current qualifying rates (i.e., stress test rules)
• 25- or 30-year amortization
• Property taxes and heating within normal ranges

How Much Mortgage Can I Afford With $50,000–$60,000 Income in Canada?

• Using the 4–5× income rule:
  • Range might be around $200,000–$300,000 of mortgage
• With little to no other debt, you’ll be closer to the upper end
• A single car loan or chunky credit card balance can pull you down fast

In this band, managing non-mortgage debt is often the biggest lever.

How Much Mortgage Can I Afford With $75,000–$90,000 Income in Canada?

• 4–5× income suggests $300,000–$450,000 of mortgage
• With low debt and solid credit:
  • You may see numbers closer to the 4.5–5× range
• Add a $500 car payment and some lines of credit:
  • You may only qualify closer to 4× income (or less)

This is a very common range for first-time buyers and couples.

How Much Mortgage Can I Afford With $100,000 Income in Canada?

At $100,000 household income:

• 4–5× income suggests $400,000–$500,000 of mortgage
• Your actual affordability will depend heavily on:
  • Debt levels
  • Property taxes and strata fees
  • Rate and amortization

With a good down payment and low debt, you may be closer to the upper end of that range.

How Much Mortgage Can I Afford With $120,000–$150,000 Income in Canada?

Here the range starts to widen:

• 4–5× income suggests $480,000–$750,000 of mortgage
• Two car loans, lines of credit, and other payments can pull you toward the lower side
• Clean debts and solid credit can push you toward the higher side

This is also where some households start layering rental properties into the mix, which can change things again.

How Much Mortgage Can I Afford With $200,000+ Household Income in Canada?

At higher incomes, the limiter is often lifestyle and debt, not income itself.

Even here:

• GDS/TDS rules still apply
• Large car fleets, big lines of credit, and multiple properties can limit you
• Income alone doesn’t guarantee a huge approval if your debt and expenses are also large.

How Much Mortgage Can We Afford on a Combined Income as a Couple?

Two incomes can help, but they also sometimes bring:

• Two sets of debt
• Two car payments
• More credit lines

For example:

• Couple A:
  • $70k + $50k income, low debt → strong TDS, good approval
• Couple B:
  • $70k + $50k income, two car loans + $25k combined credit card balances → much tighter TDS

The calculator on this page lets you plug in both incomes and all debts to see a more realistic joint number.

Standard Canadian Mortgage Affordability Calculator

How to Use This Mortgage Affordability Calculator

1. Enter your gross income (single or combined).
2. Add your monthly debt payments and total credit card / LOC balances.
3. Input your down payment and rough property tax estimate (or use defaults).
4. Choose your rate and amortization (or use the defaults).
5. Let the calculator estimate:
   • Maximum mortgage amount
   • Approximate purchase price
   • Estimated monthly payment at your contract rate and at the stress-test rate

Run a few versions with:

• Different down payments
• Different debt levels
• Different rate scenarios

to see how sensitive your affordability is.

Assumptions Behind the Calculator (Rates, Amortization, GDS/TDS, Stress Test)

By default, the calculator assumes:

• 25- or 30-year amortization (configurable)
• GDS/TDS limits in the high-30s / low-40s range
• Stress-test qualification at the higher of:
  • contract rate + 2%, or
  • 5.25% (the current minimum qualifying rate as of 2025)
• Credit card and unsecured LOC payments at 3% of balance per month

These are typical Canadian assumptions but may differ from a specific lender’s internal policy.

Who Should Use This Calculator vs the Self-Employed Calculator

Use this affordability calculator if:

• Your income is mainly salary or hourly pay, with:
  • Maybe some consistent bonus/overtime
  • Straightforward documents

Use the self-employed mortgage calculator if:

• You are:
  • An incorporated business owner
  • A sole proprietor or independent professional
  • A contractor or freelancer with variable income
• You pay yourself a mix of salary, dividends, and/or retain income in a corporation

You can always run both if your situation is mixed.

Overview of Bank Mortgage Calculators (RBC, TD, Scotiabank, BMO, CIBC)

How the RBC, TD, CIBC, BMO, and Scotiabank Mortgage Affordability Calculators Work

Most bank mortgage affordability calculators work in a similar way:

• Ask for:
  • Income
  • Debts
  • Down payment
  • Property tax and heating estimates
• Apply:
  • Their internal GDS/TDS guidelines
  • Stress-test rules (higher of 5.25% or contract rate + 2%) for federally regulated banks

They’re useful for very basic files:

• Single or joint salaried income
• Modest debt
• No rental or complex self-employed situations

But they’re usually built as lead-capture tools, not deep planning tools.

What Pitfalls Do the TD, RBC, CIBC, BMO, and Scotiabank Mortgage Affordability Calculators Have?

Common pitfalls for non-cookie-cutter borrowers:

• They rarely model:
  • 2-year averages for bonus/commission properly
  • Self-employed add-backs, corporate income, or bank-statement programs
  • Different rental income treatments (add-back vs offset)
• They may not match the bank’s actual underwriting for:
  • More complex files
  • Exceptions
  • Edge cases (e.g., certain support income, unusual debts, or multiple properties)
• Behavioural issue:
  • People often treat the calculator output as promised approval instead of a rough screen.

For many real-world files, these tools are too simple.

How This Planner-Style Calculator Goes Further Than Typical Bank Tools

This calculator and guide focus on:

• Transparency
  • Explaining GDS, TDS, and the stress test in plain language
• Planning
  • Showing how each type of income and debt affects your approval
• Self-employed clarity
  • Pointing business owners to the dedicated self-employed calculator
• Better rules of thumb
  • Giving you fast heuristics like:
    • 4–5× income
    • $550/month ≈ $100k mortgage
    • The 3% rule on revolving debt

The goal isn’t just to give you a number.

It’s to help you understand where that number comes from and what you can do about it.

Special Situations: Self-Employed, Variable Income, and Rental Properties

Self-Employed or Business Owner: How Much Mortgage Can I Afford in Canada?

For self-employed borrowers, lenders often look at:

• 2–3 years of T1s/NOAs
• Net business income (with some add-backs)
• Corporate financials and retained earnings (for some programs)
• 6–24 months of business bank statements for bank-statement-style programs

If you:

• minimize taxable income heavily, or
• pay yourself irregularly

…your “qualifying income” may be very different from your business’s true earning power.

If you’re self-employed or own a corporation, use the Self-Employed Mortgage Calculator for Canadian Business Owners to model your situation more accurately.

Bonuses, Commissions, and Variable Income: How Lenders Usually Look at Them

For heavy variable income:

• Expect lenders to:
  • Average 2 years
  • Look at the trend (up, flat, or down)
• One huge bonus year won’t automatically give you huge borrowing power; lenders often use the lower of:
  • last year’s number, or
  • the 2-year average

Planning tip:

• If you know you want to buy in 12–24 months:
  • Avoid big voluntary drops in variable income if you can
  • Keep documentation clean and consistent

Using Rental Income: How It’s Counted Toward Your Mortgage Affordability

Rental income is powerful—but lenders use it in different ways.

Two common methods:

1. Rental add-back
   • Lender adds 50%–100% of gross rent to your income, then re-runs GDS/TDS.
2. Rental offset
   • Lender uses 50%–80% of rent to offset the expenses of the rental property (PITH), effectively lowering that property’s impact on your ratios.

Rules often differ for:

• The subject property vs existing rentals
• Owner-occupied multi-unit vs non-owner-occupied rental properties

The result:

Two lenders can give you very different maximum mortgage amounts using the same rental portfolio.

How to Increase How Much Mortgage You Can Qualify For (Without Overstretching)

Reduce or Restructure Debt to Free Up Borrowing Power

Low-hanging fruit:

• Pay down credit cards and unsecured lines of credit first:
  • Every $10,000 of balance → ~$300/month assumed payment
• Clear smaller loans with big payments (e.g., a car loan with a small remaining balance)

Consider:

• Whether a debt consolidation makes sense (sometimes yes, sometimes no)
• Targeting enough pay-down to free up one or two $550/month “blocks”, which can give you roughly $100,000–$200,000 more room in mortgage qualification.

Plan Your Income and Taxes With a Mortgage in Mind (1–2 Years Ahead)

For salaried employees:

• Avoid voluntarily dropping income right before applying (e.g., moving to part-time without planning).

For variable/commission earners:

• Try to keep income as stable or rising as you approach your mortgage plans.
• Big drops can drag down your 2-year average.

For business owners:

• Work with your accountant ahead of time:
  • You might accept a slightly higher tax bill for 1–2 years to show stronger qualifying income
  • Plan salary/dividend mix and big write-offs with financing in mind

Increase Your Down Payment and Cash Cushion

Larger down payment:

• Reduces your mortgage amount and TDS
• May open up more lender options
• Can sometimes improve pricing or flexibility

A strong cash cushion:

• Helps manage:
  • Business slowdowns
  • Vacancy on rentals
  • Renewal at higher rates
  • Surprise expenses

Lenders like to see borrowers with buffer, not just minimums.

Adjust the Variables: Amortization, Term, and Property Type

• Longer amortization → lower payment → helps GDS/TDS, but more interest over time
• Term and rate type (fixed vs variable):
  • Affects your real, out-of-pocket payment and risk profile
• Property choice:
  • High property taxes and condo fees directly reduce how much you qualify for
  • Sometimes a slightly cheaper property with lower ongoing costs works better than stretching for a more expensive one with high strata or taxes

What to Do With Your Affordability Number

Comparing the Maximum You Qualify For to a Budget That Actually Fits Your Life

Once you have your number from the calculator:

• Ask:
  • “Does this payment still feel okay if business slows down?”
  • “Can we still save for retirement, kids, and future plans?”
  • “Do we have room for repairs and surprise costs?”

You don’t have to buy at your maximum.

Sometimes the best move is to buy a bit below your ceiling and keep more margin.

How to Stress-Test Your Own Budget Beyond the Official Stress Test

You can run your own stress test using this calculator:

• Check your payment at:
  • Current contract rate
  • Contract rate + 2%
  • Even contract rate + 3% if you want to be conservative

If those higher-rate payments would crush your budget, you may want to reduce your target purchase price or give yourself more time to pay down debt and build savings.

Next Steps: Documents to Gather Before You Talk to a Lender or Broker

To turn a rough affordability estimate into a serious plan, start organizing:

For employees

• Recent pay stubs
• Employment letter
• Last 2 years of T4s and/or tax returns/NOAs

For self-employed

• Last 2–3 years of T1s and NOAs
• Business financial statements
• 6–24 months of business bank statements (if needed)

For debts

• Statements for:
  • Credit cards
  • Lines of credit
  • Loans and leases
  • HELOCs

For down payment

• Bank and investment statements
• Gift letter (if receiving gifted funds)

Showing up prepared makes your application faster, smoother, and often gives you more lender options.