Mortgage affordability calculator

• The housing ratio caps mortgage payment, property tax, heat and half the condo fee at 39 percent of gross monthly income. The total debt ratio adds every other debt payment and caps the lot at 44 percent. Those are the CMHC ceilings for an insured loan; a lender may apply its own, and an uninsured loan can sit outside them.
• Income is gross, before tax and before deductions. Lenders discount variable income such as commission or self employment, often to a two year average, and this calculator does not.
• The qualifying rate is yours to enter. Leave it at zero and the ratios are tested at the rate you expect to be offered, which is not how a federally regulated Canadian lender does it.
• The price is the mortgage plus your down payment. A CMHC premium would be added on top of the mortgage without raising the price, so it is left out of this figure.
• Closing costs, land transfer tax and the lawyer are not counted. They come out of cash at completion, so they reduce what is left for a down payment.
• Nothing here checks your credit, your job history or the property itself, all of which a lender weighs before it lends.

Affordability is a ratio test, not a judgement about your budget. A lender takes your gross monthly income, multiplies it by a fixed percentage, and that product is the most it will let your housing costs reach. Housing costs mean the mortgage payment, the property tax, a heating allowance, and half of any condo fee. That is the gross debt service ratio, capped at 39 percent for an insured mortgage.

The second test adds everything else you owe each month: the car payment, the student loan, the minimum on each card, any support order. That total is capped at 44 percent of the same gross income. Whichever cap bites first sets your payment, which is why clearing a small loan can move your price more than a raise does.

Once the payment ceiling is known, the arithmetic runs in reverse. A payment, a rate and an amortization define exactly one principal, so the calculator solves for it and adds your down payment to reach a price. Stretching the amortization raises that price because it lowers the payment, at the cost of paying interest for longer.

The rate used in the test matters more than most people expect. Canadian federally regulated lenders qualify uninsured borrowers at a rate above the one on the contract, so the payment they test is larger than the one you would actually make. Enter that rate in the qualifying field and the price drops accordingly. The figure changes over time, so this page links the page that publishes it rather than storing a number that would go stale.