Question 1

How does a Canadian mortgage affordability calculator work?

Accepted Answer

Canadian mortgage affordability is determined by two debt service ratios set by CMHC and OSFI. The Gross Debt Service (GDS) ratio — your mortgage payment, property tax, heating, and 50% of condo fees divided by gross income — must be 39% or less. The Total Debt Service (TDS) ratio adds your other monthly debts and must stay at or below 44%. Lenders also apply the mortgage stress test, qualifying you at the higher of your contract rate plus 2% or 5.25%. This calculator uses all three rules to find your maximum purchase price.

Question 2

What is the GDS ratio in Canada?

Accepted Answer

The Gross Debt Service (GDS) ratio is the percentage of your gross monthly income needed to cover housing costs: your mortgage payment (at the qualifying/stress test rate), property taxes, heating costs, and 50% of monthly condo fees if applicable. CMHC requires your GDS ratio to be 39% or less. For example, if your gross monthly income is $8,000, your total monthly housing costs cannot exceed $3,120.

Question 3

What is the TDS ratio in Canada?

Accepted Answer

The Total Debt Service (TDS) ratio includes everything in the GDS ratio plus all other monthly debt payments — car loans, student loans, credit card minimums, lines of credit, and any other recurring debt obligations. The TDS limit is 44% of gross monthly income. If you carry significant existing debts, the TDS ratio will typically be the binding constraint on your maximum mortgage.

Question 4

What is the Canadian mortgage stress test?

Accepted Answer

The OSFI B-20 mortgage stress test requires that borrowers qualify at a rate higher than their actual contract rate — specifically the greater of their contract rate plus 2%, or 5.25%. This ensures borrowers can still manage payments if rates rise after they take out the mortgage. The GDS and TDS ratios are calculated using this higher qualifying rate, not your actual interest rate.

Question 5

How much mortgage can I afford in Canada on a $100,000 salary?

Accepted Answer

On a $100,000 gross annual salary with no other debts, a $100,000 down payment, and a 4.99% fixed rate over 25 years in Ontario, you could typically afford a home priced around $480,000–$520,000. The exact number depends on your province (property tax rates vary), heating costs, and any other monthly debts. Use the calculator above with your specific inputs for a precise answer.

Question 6

Does adding a co-applicant increase my mortgage affordability?

Accepted Answer

Yes. Lenders combine both applicants' gross incomes when calculating GDS and TDS ratios. A co-applicant with $80,000 in annual income, combined with a primary applicant earning $100,000, gives a household income of $180,000 — substantially increasing the maximum mortgage. Note that the co-applicant's existing debts are also included in the TDS calculation.

Question 7

Why is property tax included in the affordability calculation?

Accepted Answer

Property taxes are included in the GDS ratio because they are a mandatory, ongoing housing cost. Lenders use an estimate of annual property taxes (typically 1% of the purchase price or the actual municipal rate) when assessing what you can afford. In cities with higher property tax rates like Toronto or Winnipeg, this can meaningfully reduce your maximum purchase price compared to lower-tax municipalities.

Mortgage Affordability Calculator Canada

Common affordability questions