Borrowing Capacity Calculator

Estimate your maximum mortgage and maximum home price using Canadian lending ratios (GDS/TDS) and the mortgage stress test. The chart also shows your monthly leftover after housing costs and other debts.

Property type
Household gross income
$
Down payment
$
Existing debts
$
Property taxes
$
Heating costs
$
Interest rate
%
Qualifying rate (stress test)
%
Amortization
First-time buyers and purchasers of newly built homes may be eligible for a 30-year amortization.
Maximum mortgage amount
$
Maximum property purchase price
$
Monthly gross leftover
$
Monthly gross income − housing − debts
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Calculate your take-home pay and analyze your budget more precisely
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⚠️ Estimate for informational purposes only. Actual qualification depends on lender policy, credit profile, property details, and current underwriting rules.

How this Borrowing Capacity Calculator Works

This calculator estimates the maximum mortgage amount you may qualify for in Canada. It uses the standard banking framework: your gross income, current monthly debts, and the two critical underwriting ratios: GDS and TDS. To ensure accuracy, it also applies the Canadian mortgage stress test, which evaluates your budget against future interest rate fluctuations.

Deep Dive: Understanding GDS and TDS Ratios

Lenders use these two percentages to decide if you can afford a home. If your expenses exceed these limits, your loan application could be declined, even with a high salary.

Ratio Limit What's Included?
GDS 32% Mortgage (Principal + Interest) + Property Taxes + Heating + 50% of Condo Fees.
TDS 40% Everything in GDS + Car loans + Credit card minimums + Student loans + Alimony.

Key Financial Concepts

  • Contract Interest Rate: The actual rate you negotiate with your lender for your monthly payments.
  • Qualifying Rate (Stress Test): A "safety" rate used by lenders. It is calculated as the higher of your contract rate + 2%, or the floor rate of 5.25%.
  • Stress Test Purpose: It ensures you can still afford your home if interest rates rise when you renew your mortgage.

What counts as Housing Costs?

In the eyes of a Canadian lender, your "housing budget" isn't just your mortgage. It includes:

  • Mortgage Payment: Principal and interest based on the qualifying rate, not your contract rate.
  • Property Taxes: Estimated annual municipal and school taxes (usually divided by 12).
  • Heating Costs: Lenders often use a fixed monthly estimate (e.g., $100-$150) to ensure you can heat the property.
  • Condo Fees: If applicable, 50% of the monthly fees are added to your debt load because they are mandatory costs.

Rental Income & Multi-Unit Properties (Plex)

Purchasing a duplex or triplex as a primary residence is a powerful way to increase your capacity. Lenders apply a rental inclusion rate (typically 50% to 70%) to the potential rent. Example: If the rental unit brings in $1,000/month, the bank may add $500-$700 to your gross income in their calculations.

Down Payment: The "Hard Limit"

Your borrowing capacity isn't just about your salary; it's also about your liquid assets.

  • The $1 Million Rule: For any home priced at $1,000,000 or more, mortgage default insurance (CMHC) is unavailable. A minimum 20% down payment ($200,000+) is mandatory.
  • Amortization (25 vs 30 years): A 30-year amortization lowers your monthly payment, increasing your capacity. It is now accessible if:
    • You have a 20% down payment.
    • Or you are a first-time homebuyer.
    • Or you are purchasing a new construction.

FAQ - Borrowing Capacity

Why is my qualifying rate higher than my negotiated rate?

This is called the Stress Test. In Canada, financial institutions must simulate your ability to make payments using a higher interest rate (usually your rate + 2%, or 5.25%). This ensures that you will still be able to afford your home even if interest rates rise in the future.

What is the difference between GDS and TDS ratios?

These are the two main indicators used by lenders: GDS (Gross Debt Service): Focuses only on housing-related costs (mortgage, property taxes, heating, and 50% of condo fees). It generally should not exceed 32% of your gross income. TDS (Total Debt Service): Includes GDS plus all your other debts (car loans, credit cards, personal loans). This ratio generally should not exceed 40%.

Why does my down payment limit my purchase price?

In Canada, down payment rules are progressive. Even if your income allows you to buy a $800,000 home, you must have at least 5% on the first $500,000 and 10% on the remaining amount. In addition, for any property priced at $1,000,000 or more, a 20% down payment is legally required.

How is rental income from a duplex or triplex calculated?

Banks do not include 100% of rental income. They apply an “inclusion factor” (usually between 50% and 70%) to account for vacancies and maintenance. Our calculator allows you to adjust this slider to see the real impact on your borrowing power.

Can I amortize my mortgage over 30 years?

A 30-year amortization is now available in more situations in Quebec: if you are buying a newly built property, if you are a first-time buyer, or if you provide a 20% or higher down payment. This lowers your monthly payments and can increase the amount you are able to borrow.