Canada Mortgage Affordability Calculator
Mortgage Affordability Calculator
Enter your financial details to estimate your affordability based on Canada’s lending rules. This tool will calculate your debt service ratios and show how you measure up against the mandatory mortgage stress test.
Your Financial Profile
Your Affordability Snapshot
Your Qualifying Rate (Stress Test) is 6.50%.
Max. Mortgage Amount
$0
Max. Home Price
$0
GDS Ratio: 0%
TDS Ratio: 0%
Understanding the Core Metrics
Your mortgage qualification depends on two key ratios: Gross Debt Service (GDS) and Total Debt Service (TDS). These metrics help lenders assess your ability to manage housing costs and overall debt relative to your income.
Gross Debt Service (GDS) Ratio
This ratio measures the percentage of your gross annual income needed to cover your housing costs. The maximum limit is typically 39%.
GDS = (Mortgage + Taxes + Heat + 50% Condo Fees) / Gross Income
Total Debt Service (TDS) Ratio
This ratio provides a complete picture by including all your debt obligations, not just housing. The maximum limit is typically 44%.
TDS = (Housing Costs + All Other Debts) / Gross Income
The Mortgage Stress Test
Federally regulated lenders are required to test your affordability against a higher interest rate, known as the Minimum Qualifying Rate (MQR). This ensures you can handle your payments if rates rise. The MQR is the higher of:
- Your contract mortgage rate + 2%
- A floor rate of 5.25%
This means your GDS and TDS ratios are calculated using the MQR, not your actual mortgage rate, which significantly impacts the total mortgage amount you can qualify for.
A-Lenders vs. B-Lenders: A Strategic Choice
The Canadian mortgage market has two main types of lenders with different rules. Understanding the difference is key to finding the right mortgage for your situation, especially if you don’t fit the traditional borrower profile.
Comparing Lender Criteria
A-Lenders (Major Banks)
Federally regulated institutions like RBC, TD, and Scotiabank. They offer prime rates but have strict requirements, including a mandatory stress test for everyone. Best for borrowers with strong credit and stable, verifiable income.
B-Lenders (Credit Unions, Trusts)
Provincially regulated lenders that offer more flexibility. They may accept lower credit scores and can sometimes waive the stress test for uninsured mortgages (20%+ down payment). Rates are typically higher, but they provide a path to ownership for self-employed individuals or those with unique financial situations.
Strategies to Maximize Your Affordability
You have the power to improve your mortgage application. Taking proactive steps can significantly increase the amount you can afford and help you secure better rates.
Reduce Your Debt
Paying down high-interest debts like credit cards or car loans directly lowers your TDS ratio. This is one of the most effective ways to increase your borrowing power and improve your credit score.
Increase Your Income
A higher gross income improves both your GDS and TDS ratios. Consider documenting all sources of income, including part-time work or reliable rental income, to present a complete financial picture to lenders.
Save for a Larger Down Payment
A down payment of 20% or more allows you to avoid mortgage default insurance. This not only lowers your monthly costs but also opens up the possibility of working with B-lenders who may waive the stress test.
Improve Your Credit Score
A higher credit score (ideally 650+) is essential for A-lenders. Ensure you make all payments on time, keep credit card balances low, and avoid applying for new credit right before a mortgage application.
Get a Pre-Approval
A pre-approval from a lender gives you a clear understanding of your budget and locks in an interest rate for 90-120 days. This gives you confidence when shopping for a home and makes your offer more attractive to sellers.
Budget for Closing Costs
Remember that your budget needs to include more than just the down payment. Plan for one-time closing costs like legal fees, land transfer tax, and home inspection, which can total 1.5% to 4% of the purchase price.