Your numbers
Step 1 of 2Your estimate
Step 2 of 2A lender may approve more or less.
- Mortgage incl. insurance
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- Payment at contract rate
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- Stress-test rate
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- Insurance premium
- Est. closing costs
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- Cash needed at 1.5%
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A Canadian lender typically examines two ratios. Gross Debt Service (GDS) measures mortgage principal and interest, property taxes, heat, and 50% of condo fees against gross monthly household income. Total Debt Service (TDS) adds other monthly debts. CMHC restricts insured applications to 39% GDS and 44% TDS; lenders can still apply stricter standards.2
The calculator’s core limits
GDS housing budget = 39% × monthly gross income − taxes − heat − 50% of condo fees
TDS housing budget = 44% × monthly gross income − taxes − heat − 50% of condo fees − other monthly debt
The lower monthly budget becomes the stress-tested mortgage-payment ceiling.
What counts as debt?
Include required payments for car loans, leases, student loans, personal loans, lines of credit and support obligations. For unsecured lines of credit and credit cards, CMHC guidance says lenders should factor a monthly payment of at least 3% of the outstanding balance.2 If you only enter the minimum payment shown on a statement, your estimate may be too high.
Why the answer is a ceiling, not a target
A lender’s maximum can leave little room for repairs, utilities, childcare, commuting, savings or an income interruption. A safer personal budget may be lower. Try the calculator again with a smaller income, higher rate or larger debt payment to create a margin.
- Estimate the lender ceiling.
Use your gross income and actual required debt payments. - Set aside closing cash.
FCAC suggests preparing for 1.5% to 4% of the purchase price, in addition to the down payment.6 - Build a homeowner budget.
Add insurance, utilities, maintenance and savings before deciding what feels comfortable. - Compare real offers.
A pre-approval tests documentation and lender-specific rules; it is not a guarantee of final funding.
For most newly underwritten uninsured mortgages at federally regulated lenders, OSFI expects lenders to qualify borrowers at the greater of 5.25% or the contract rate plus 2 percentage points. At a 4.49% contract rate, for example, the calculator qualifies you at 6.49%.1
Contract rate vs. qualifying rate
Your contract rate determines the payment you are scheduled to make. The qualifying rate determines whether your income can carry the mortgage under a higher-rate scenario. The results panel shows both.
Who applies the stress test?
Guideline B-20 governs federally regulated financial institutions and uninsured mortgages. Insured mortgages are also subject to a minimum qualifying-rate framework under federal mortgage-insurance rules. Credit unions may be provincially regulated, but many use similar tests. Policies, exceptions and documentation vary by lender.
What changed for straight switches?
OSFI does not expect the set minimum qualifying rate to be applied when a borrower makes an uninsured “straight switch” at renewal between federally regulated lenders with no increase to the loan amount or amortization. This calculator is designed for a new purchase, not a renewal switch.1
How to improve your stress-test result
- Reduce recurring debt. Every $100 removed from monthly debt can create more mortgage-payment capacity under TDS.
- Increase documented gross income. Lenders decide what income is stable and usable; variable or self-employed income may require more history.
- Increase the down payment. This lowers the base loan and can reduce or eliminate mortgage-insurance premiums.
- Compare lenders and products. A lower contract rate can also lower the qualifying rate once rate + 2% is above the 5.25% floor.
For an owner-occupied home up to $500,000, the general minimum down payment is 5%. From $500,000 to $1,499,999, it is 5% of the first $500,000 plus 10% of the portion above $500,000. Homes priced at $1.5 million or more require at least 20% down and are not eligible for CMHC mortgage loan insurance.3
| Purchase price | General minimum | Insurance |
|---|---|---|
| $500,000 or less | 5% of price | Normally required below 20% down |
| $500,001–$1,499,999 | 5% of first $500,000 + 10% of the remainder | Normally required below 20% down |
| $1.5 million or more | 20% of price | CMHC insurance unavailable |
How the insurance premium is estimated
CMHC’s published homeowner premium schedule is based on loan-to-value: 4.00% for 90.01%–95% LTV, 3.10% for 85.01%–90%, 2.80% for 80.01%–85%, 2.40% for 75.01%–80%, 1.70% for 65.01%–75%, and 0.60% up to 65%. The calculator adds the applicable premium to the mortgage balance when the down payment is below 20%.4
Ontario, Quebec and Saskatchewan apply provincial sales tax to mortgage-insurance premiums, and that tax cannot be added to the mortgage. This calculator does not estimate that provincial tax.4
Can I choose a 30-year amortization?
Since December 15, 2024, insured 30-year amortizations have been available to all first-time home buyers and all buyers of new builds, subject to program and lender rules.5 With at least 20% down, some lenders offer uninsured 30-year amortizations. A longer amortization lowers the scheduled payment but generally increases total interest and does not change your mortgage term.
The results show a planning range, not an itemized quote. Actual costs depend heavily on the province, municipality, property, lender and transaction. The bottom of the range is added to “cash needed” so the down payment is not mistaken for the full amount due.
Cash planning example
On a $600,000 home, 1.5% to 4% is $9,000 to $24,000. That amount is separate from the down payment. High land-transfer taxes or a complex transaction can push the total higher; request local estimates before making an offer.
Questions home buyers ask
How accurate is this Canadian home affordability calculator?
It uses standard debt-service benchmarks, the federal qualifying-rate formula, Canadian mortgage compounding, minimum down-payment rules and published CMHC premium tiers. It cannot assess your credit, accepted income, property, lender policy or documentation, so treat it as a planning estimate rather than an approval.
Does the stress test use my actual mortgage rate?
It starts with your entered contract rate, then qualifies at the greater of 5.25% or that rate plus 2 percentage points. Your displayed scheduled payment is calculated at the contract rate; the maximum is constrained by the higher qualifying rate.
Why did monthly debts reduce my result so much?
Other debts count in TDS. When TDS is the binding limit, a required car, credit or loan payment directly reduces the monthly room available for the stress-tested mortgage payment.
Are condo fees included?
Yes. Consistent with CMHC debt-service guidance, the calculator includes 50% of monthly condo fees in GDS and TDS.
Does rental income count?
Potentially, but lender treatment varies by property type, occupancy, documentation and underwriting method. Add only income a lender has confirmed it will use; for a conservative estimate, leave uncertain rent out and ask a mortgage professional how it will be handled.
Can I buy a $1.5 million home with less than 20% down?
Under the current general insured-mortgage rules cited here, no. Homes priced at $1.5 million or more require a minimum 20% down payment and are not eligible for CMHC mortgage loan insurance.
Does a 30-year amortization always increase affordability?
It lowers the payment for a given loan, which can increase a debt-service estimate. But insured 30-year eligibility is limited to first-time buyers or buyers of new builds, and lenders can apply their own rules. A longer amortization also usually means more interest over time.
Is mortgage default insurance the same as mortgage life insurance?
No. Mortgage default insurance protects the lender if the borrower defaults and is typically required below 20% down. Mortgage life insurance is optional borrower coverage designed to pay some or all of a mortgage after an insured event.
Should I use gross or net income?
Use gross annual household income before tax for GDS and TDS. For your own comfort test, build a separate monthly budget from take-home pay and include costs the lender ratios do not fully capture.
What is the difference between term and amortization?
Amortization is the full repayment timeline used to calculate payments, such as 25 years. The mortgage term is the shorter contract period with one lender and rate, often five years, after which the remaining balance is renewed or repaid.
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Questions about this page: northpeakestimates@proton.me.