About Home Affordability Calculator
Free home affordability calculator. Find out how much house you can afford based on your income, debts, down payment, and interest rate. See your max price instantly.
How to use
- Enter your annual gross household income (before taxes). If buying with a partner, include both incomes. Lenders use gross income, not take-home pay, when calculating your borrowing capacity. Include regular employment income, self-employment income, rental income, and any other consistent income sources.
- Input your total monthly debt payments including car loans, student loans, credit card minimums, and any other recurring debt obligations. These reduce your borrowing capacity because lenders apply the Total Debt Service (TDS) ratio, which limits all debt payments to 40-44% of gross income.
- Enter your available down payment amount. In Canada, the minimum is 5% for homes under $500,000, but larger down payments reduce your mortgage amount, eliminate CMHC insurance at 20%+, and may qualify you for better interest rates.
- Set the current mortgage interest rate or use the calculator default. Remember that Canadian lenders stress-test at the qualifying rate (your rate + 2% or 5.25%, whichever is higher), which is the rate used to determine your actual borrowing capacity.
- View your maximum affordable home price, estimated monthly payment breakdown (principal, interest, taxes, insurance), and the GDS/TDS ratios that determine your qualification. The GDS (Gross Debt Service) ratio should stay below 32-39% and TDS below 40-44%.
- Adjust your down payment or reduce existing debt to see how affordability changes. Paying off a $400/month car loan can increase your maximum purchase price by $70,000-$90,000. This is often the fastest path to affording a more expensive home.
Frequently asked questions
How much house can I afford on my salary?
The traditional guideline is spending no more than 28-32% of gross income on housing costs (the GDS ratio). On a $75,000 salary, that supports roughly $1,750-$2,000/month for mortgage, taxes, and insurance — approximately a $350,000-$400,000 home with 10% down at a 5.5% rate. However, Canadian lenders also apply the stress test, qualifying you at your rate + 2%, which reduces your maximum by roughly 20%. Always run this calculator to see your specific numbers, as income, debt, down payment, and interest rate all interact to determine your maximum purchase price.
What DTI ratio do I need for a mortgage?
In Canada, lenders use two ratios: GDS (Gross Debt Service) limits housing costs to 32-39% of gross income, and TDS (Total Debt Service) limits all debt payments to 40-44% of gross income. Most major banks use 32% GDS and 40% TDS as standard maximums, though some alternative lenders allow higher ratios. In the US, conventional loans typically require a maximum DTI of 36-43%, while FHA loans allow up to 50% with compensating factors. Lower ratios give you a safer margin and more financial flexibility for unexpected expenses.
How much down payment do I need?
In Canada, minimums are: 5% for homes under $500,000, 10% on the portion between $500,000 and $1,499,999, and 20% for homes at $1.5 million or above. Below 20% down requires CMHC insurance adding 2.8-4.0% to the mortgage. In the US, conventional loans require 3-20% down, FHA requires 3.5%, and VA/USDA offer 0% down for eligible buyers. Putting 20% down eliminates insurance requirements and may qualify you for lower interest rates, but it is not always worth waiting years to save the additional amount.
What is the mortgage stress test?
A Canadian federal rule requiring all mortgage applicants to qualify at the higher of their contract rate plus 2% or the Bank of Canada qualifying rate (currently 5.25%). If your lender offers 4.5%, you must prove you can afford payments at 6.5%. This reduces maximum borrowing by roughly 20% compared to qualifying at the actual rate. The stress test applies to purchases, refinances, and renewals with a new lender. It was introduced in 2018 to protect borrowers from rate increases and to moderate housing market price growth.
Should I include property taxes and insurance in affordability?
Absolutely — property taxes and insurance are mandatory costs that lenders include when calculating your GDS ratio. Property taxes vary dramatically: 0.5-0.7% of assessed value in Toronto, 1.0-1.5% in Ottawa, 2.0-2.5% in Winnipeg, and 0.3-0.5% in Vancouver. Home insurance typically costs $1,000-$2,500 per year depending on property value and location. On a $500,000 home, taxes and insurance can add $400-$1,000+ per month to your housing costs beyond the mortgage payment. Ignoring these costs leads to buying more home than you can comfortably afford.
Does existing debt reduce how much home I can afford?
Yes, significantly. Every $500/month in existing debt payments reduces your borrowing capacity by approximately $85,000-$100,000. A $400/month car payment, $200/month student loan, and $150/month in credit card minimums ($750 total) could reduce your maximum home price by $120,000-$150,000. This is because the TDS ratio limits total debt (including housing) to 40-44% of gross income. Paying off or reducing existing debt before applying for a mortgage is often the most effective way to increase how much house you can afford. Once you know your maximum purchase price, use the
Mortgage Calculator to see your exact monthly payment at different rates and amortization periods.
What other costs should I budget for beyond the mortgage?
Monthly homeownership costs beyond your mortgage payment include: property taxes ($200-$600/month), home insurance ($80-$200/month), utilities ($150-$400/month), maintenance and repairs (budget 1-2% of home value per year, or $400-$800/month on a $500,000 home), and potentially condo fees ($200-$800/month). A $2,000 mortgage payment often becomes $3,000-$3,500 in total monthly housing costs. Budget for these before buying, not after, to avoid being house-poor — owning a nice home but having no money for anything else.
Part of ToolFluency’s library of free online tools for Real Estate. No account needed, no data leaves your device.