How much mortgage can you actually afford in Canada?

Gross Debt Service (GDS) measures your housing costs against your gross monthly income: mortgage principal and interest, property tax, heating and half of any condo fees. Most lenders cap GDS at roughly 39%.

Total Debt Service (TDS) adds everything else you owe each month — car loans, student loans, credit card minimums and the payment on any line of credit — and is usually capped near 44%. Whichever ratio binds first sets your ceiling, and for most buyers with a car payment it is TDS.

A practical consequence: paying down a $500-a-month car loan can raise your borrowing power by roughly $80,000–$100,000, far more than most people expect. Run both scenarios in the affordability calculator before you decide where your next dollar goes.

You do not qualify at your contract rate. Federally regulated lenders must test you at the greater of your contract rate plus two percentage points or 5.25%. At a 4.79% contract rate you are actually being qualified near 6.79%, which typically cuts affordability by 15–20% compared with the rate you will really pay.

Credit unions regulated provincially have some flexibility, and switching lenders at renewal no longer requires re-passing the test for a straight switch of an uninsured mortgage. That single change is why shopping your renewal is now worth doing.

The minimum down payment is 5% on the first $500,000 of the price, 10% on the portion between $500,000 and $1.5 million, and 20% on any home priced above $1.5 million, where default insurance is unavailable.

With less than 20% down you pay a CMHC (or Sagen/Canada Guaranty) premium of roughly 2.8%–4.0% of the loan, added to the mortgage balance rather than paid in cash. Insured buyers get a slightly lower interest rate in exchange, so 'always put 20% down' is not automatically the cheaper answer — compare both in the payment calculator.

GDS and TDS ignore daycare, RRSP contributions, saving for a car, and the maintenance a house demands. Budget 1%–2% of the home's value per year for upkeep on a freehold property.

Closing costs also arrive in cash on possession day: land transfer tax, legal fees, title insurance, an inspection, an appraisal and tax adjustments. In Toronto, where both provincial and municipal land transfer taxes apply, that bill regularly clears $30,000 on a $900,000 purchase.

A broker submits your file to a dozen lenders at once, including monoline lenders you cannot walk into. They are paid by the lender, so their advice costs you nothing, and they will tell you which lender is currently pricing your specific profile — self-employed, new to Canada, rental income — most sharply.

Bring the numbers from these calculators to that conversation. Arriving with a target price, a stress-tested payment and a closing-cost figure turns a sales meeting into a planning session.