Plan your budget before you fall in love with a house.
How much house can you afford?
Canadian lenders use the GDS/TDS ratios set by OSFI to determine your borrowing capacity. We apply these standards — plus the OSFI stress test — to give you a realistic Canadian budget.
Before taxes. Include all co-borrowers.
Car loans, student loans, minimum credit card payments. Do not include current rent or utilities.
Your debt levels are healthy, leaving plenty of room for a mortgage payment.
Recommended Budget
This conservative estimate ensures you aren't "house poor" and can comfortably afford maintenance and lifestyle expenses.
Lenders may approve you for up to $630,000, but borrowing at your absolute maximum limit leaves little room for financial emergencies.
Housing Ratio
Gross Debt Service: your housing costs (mortgage P+I, property tax, heating) should not exceed 39% of your gross monthly income.
Total Debt Ratio
Total Debt Service: housing costs PLUS all other monthly debts (car, student loans, credit cards) should not exceed 44% of gross income.
How Much Mortgage Can You Afford in Canada?
Canadian mortgage affordability is governed by OSFI's federal mortgage rules, which require all federally regulated lenders to qualify borrowers at a stress test rate: the higher of your contract interest rate plus 2%, or 5.25%. As of May 2026, with 5-year fixed rates around 4.39%, most borrowers are stress-tested at approximately 6.39%. This means the maximum mortgage you qualify for on paper is lower than what you can actually afford at today's rates — by design, to ensure you can still make payments if rates rise at renewal.
The two debt ratios Canadian lenders use are GDS (Gross Debt Service) and TDS (Total Debt Service). Your GDS ratio measures housing costs (mortgage payment, property tax, heating, and 50% of condo fees) as a percentage of gross monthly income — the maximum is 39%. Your TDS ratio adds all other monthly debt obligations (car payments, student loans, credit cards) and must stay below 44%. Our affordability calculator applies both limits and shows you the binding constraint.
First-time homebuyers in Canada have access to several programs that can increase affordability. The First Home Savings Account (FHSA) lets you contribute up to $8,000/year (lifetime $40,000) tax-free toward a first home purchase. The RRSP Home Buyers' Plan allows you to withdraw up to $35,000 tax-free from your RRSP as a down payment. The First-Time Home Buyer Incentive (FTHBI) offered a shared equity loan of 5–10% of the purchase price, reducing your monthly payment — check with a mortgage broker for current availability.
Your down payment size has a significant impact on affordability beyond just reducing your loan amount. In Canada, a minimum 5% down payment is required for homes up to $500,000, 10% on the portion between $500,000 and $999,999, and 20% on homes $1 million and above (which are ineligible for CMHC insurance). A down payment below 20% triggers a mandatory CMHC premium of up to 4.00%, which is added to your mortgage and increases your monthly payment — factor this into your affordability planning.