Home Affordability Calculator

Q: What income do I need to afford a $700,000 home in Canada?

To afford a $700,000 home with 10% down at 5.5% interest, you need approximately $140,000–$160,000 in gross household income to pass the mortgage stress test, depending on existing debts.

Q: What is the GDS ratio?

The GDS (Gross Debt Service) ratio is housing costs divided by gross income. The CMHC maximum is 39%. Housing costs include mortgage payment, property tax, heat, and 50% of condo fees.

Q: Does the mortgage stress test affect affordability?

Yes. The stress test reduces your maximum purchase price by roughly 20–25% compared to qualifying at your actual rate. It tests whether you can afford payments at your rate + 2% or 5.25%, whichever is higher.

Find out how much home you can afford based on your income and expenses

Your Financial Information

Enter your income and expenses

Annual Gross Income ($)

Monthly Debts ($)

Car payments, credit cards, student loans, etc.

Down Payment ($)

Mortgage Interest Rate (%)

Loan Term (years)

What You Can Afford

Based on standard lending guidelines

Enter your financial details and click Calculate Affordability

This calculator provides rough estimates. Actual approval amounts depend on credit score, employment history, and lender policies.

How Home Affordability Is Calculated in Canada

Canadian lenders use two key ratios to determine how much mortgage you can afford: the Gross Debt Service (GDS) ratio and the Total Debt Service (TDS) ratio. These are set by federal guidelines from OSFI and CMHC.

The GDS ratio measures housing costs (mortgage payment + property tax + heat + 50% of condo fees) as a percentage of gross income. The maximum is 39%. The TDS ratio adds all other debt payments (car loans, credit cards, student loans) to the equation. The maximum is 44%.

The stress test means you must qualify at the higher of your actual rate + 2% or 5.25%. Even if your lender offers you 4.5%, you must prove you can afford payments at 6.5%. This significantly reduces the maximum you can borrow compared to pre-2018.

How to Increase Your Mortgage Affordability

Pay down existing debts: Credit card balances and car loans directly reduce your TDS ratio. Paying off high-interest consumer debt before applying can significantly increase what you qualify for.

Increase your down payment: A larger down payment reduces the mortgage amount and lowers monthly payments. At 20%+, you also avoid CMHC mortgage insurance, freeing up cash flow.

Add a co-borrower: Adding a co-signer with good income and credit improves your GDS/TDS ratios and can increase the mortgage you qualify for — common for couples and family members.

Choose a longer amortization: A 30-year amortization (available for first-time buyers purchasing new builds under new CMHC rules) lowers monthly payments and improves your debt ratios for qualification purposes.

Frequently Asked Questions

What income do I need to afford a $700,000 home in Canada?

To afford a $700,000 home with a 10% down payment at 5.5% interest, you need approximately $140,000–$160,000 in gross household income to pass the mortgage stress test. This varies by existing debts and lender.

What is the GDS ratio and how is it calculated?

GDS (Gross Debt Service) ratio = (monthly mortgage + property tax + heat + 50% condo fees) ÷ gross monthly income. The maximum allowed by CMHC-insured lenders is 39%.

Does the mortgage stress test affect affordability?

Yes, significantly. The stress test reduces your maximum purchase price by roughly 20–25% compared to qualifying at your actual rate. It ensures you can still afford payments if rates rise by 2%.

Can I afford a home on a single income in Canada?

Yes, but the affordable price point depends on your city. At $80,000 income with minimal debts, you might qualify for $350,000–$450,000 in many cities — more in affordable markets like Regina or Halifax, less in Toronto or Vancouver.

Next Steps

Once you know your affordability, compare rates and calculate your CMHC premium to get the full picture.

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