How much house can I afford in Canada?
Most Canadians can afford a home whose costs keep GDS at or below 39% and TDS at or below 44% of gross income, tested at the qualifying rate (your rate + 2 points, minimum 5.25%), with at least the federal minimum down payment. For example, $100,000 of income, $50,000 down and $400/month of debts buys about $477,500 at 4.12%.
Worked examples use 4.12%, the Bank of Canada's average effective rate on new insured 5-year-plus fixed mortgages (2026-08), and are recalculated whenever our rules or rates are updated.
The short answer
A Canadian lender will let you spend until one of three limits bites: your gross debt service (GDS) ratio reaches 39% of gross income, your total debt service (TDS) ratio reaches 44%, or your down payment falls below the federal minimum for the price. Both ratios are tested at the stress-test qualifying rate, not your actual rate.
Example: a household earning $100,000 with a $50,000 down payment (closing costs come on top), $400 a month of other debts and a 4.12% five-year rate can afford about $477,500 in Ontario. The mortgage would be $440,753 including a $13,253 CMHC premium, and the payment about $2,347 a month.
The three tests lenders run
1. GDS: housing costs ÷ income ≤ 39%
Housing costs are the mortgage principal and interest at the qualifying rate, property tax, heating and 50% of any condo fees. Everything is monthly, divided by gross (pre-tax) monthly income.
2. TDS: housing costs + other debts ÷ income ≤ 44%
Add every other monthly debt payment: car loans and leases, student loans, lines of credit, credit-card minimums and support payments. For most buyers with a car payment, TDS is the tighter limit.
3. The down payment and insured-mortgage rules
You need at least 5% of the first $500,000 and 10% of the rest. Under 20% down, the mortgage must be insured, which also means the price must be below $1,500,000 and the amortization can be 30 years only for first-time buyers or new builds. See down payment rules.
How much house by income
Same assumptions as the example ($50,000 down where it is enough, $400 of monthly debts, 4.12%, 25 years, Ontario, 0.75% property tax, $100 heating):
| Household income | Maximum price | Mortgage | Monthly payment | What limits it |
|---|---|---|---|---|
| $60,000 | $279,300 | $235,720 | $1,255 | TDS |
| $80,000 | $379,200 | $339,405 | $1,807 | TDS |
| $100,000 | $477,500 | $440,753 | $2,347 | GDS |
| $120,000 | $562,500 | $533,000 | $2,838 | GDS |
| $150,000 | $695,100 | $670,904 | $3,573 | GDS |
| $200,000 | $750,000 | $728,000 | $3,877 | Down payment |
Notice that at higher incomes the $50,000 down payment, not income, becomes the limit. Saving more lifts the ceiling faster than earning more once you reach that point.
What moves your number most
- Interest rate. One point higher (5.12%) cuts the example from $477,500 to $443,600.
- Monthly debts. Here GDS is the limit, so clearing the $400/month debt doesn't raise the maximum (it stays $477,500); it does make the payment easier to carry. When TDS is the limit, every $100 a month of debt removed adds borrowing power.
- Amortization. 30 years (first-time buyer, insured) raises it to $501,800, at the cost of more total interest and a 0.20-point premium surcharge.
- Property tax and condo fees. Every $100 a month of housing cost removes roughly as much borrowing power as $100 of debt.
- Down payment. More down lowers the loan, the insurance premium and, past 20%, removes the premium entirely.
Lender maximum vs a comfortable budget
The maximum is what a lender's rules allow, not what fits your life. GDS ignores childcare, savings goals, transportation and maintenance. A common rule of thumb is to keep total housing costs closer to 30–35% of gross income and to hold an emergency fund of three to six months of expenses after closing.
Also budget for maintenance (often estimated at 1–3% of the home's value a year), insurance, utilities beyond heat, and the rate reset when your term renews.
Don't forget cash to close
On top of the down payment you'll need closing costs. In the example they come to about $5,785, including $2,025 of Ontario land transfer tax after the first-time buyer refund and $1,060 of sales tax on the CMHC premium. Check yours with the closing costs calculator.
Next steps
- Run your numbers in the affordability calculator, with your real debts and your city's property tax.
- Pull your credit report and fix errors; insurers need a score of at least 600 for one borrower.
- Gather income documents and get a pre-approval with a rate hold.
- Set your own comfortable limit below the maximum and shop within it.
How to work out how much house you can afford in Canada
- Add up gross income. Total the pre-tax annual income of everyone on the mortgage and divide by 12.
- Find your qualifying rate. Take your offered rate plus 2 points, or 5.25% if that is higher.
- Calculate the GDS limit. Multiply monthly income by 39% and subtract property tax, heating and half of condo fees: what's left is the most the mortgage payment can be.
- Check the TDS limit. Multiply monthly income by 44% and subtract housing costs and other debt payments; use whichever payment limit is lower.
- Convert the payment to a price. Turn the maximum payment into a mortgage amount at the qualifying rate, add your down payment, and check the down payment meets the minimum for that price.
Frequently asked questions
How much house can I afford on a $100,000 salary in Canada?
With $50,000 down, $400 a month of other debts and a 4.12% rate over 25 years, about $477,500 in Ontario. The exact figure depends on your debts, property tax and down payment.
What percentage of my income should go to housing?
Lenders allow up to 39% of gross income for housing costs (GDS) and 44% for all debts (TDS) on insured mortgages. Many people aim lower, around 30–35%, to leave room for savings and other costs.
Is the affordability limit based on gross or net income?
Gross income: your income before tax and deductions. That's why the ratio limits look high compared with take-home pay.
Do lenders use my actual interest rate?
No. They test payments at the qualifying rate, the greater of your rate plus 2 points or 5.25%. You still pay your actual rate.
Primary sources
- CMHC — Calculating GDS / TDS. Checked .
- OSFI — Minimum qualifying rate for uninsured mortgages (Guideline B-20). Checked .
- Department of Finance Canada — Statement on the insured mortgage stress test (effective December 12, 2023). Checked .
- CMHC — Homeowner mortgage loan insurance: Purchase (eligibility). Checked .
- Department of Finance Canada — Mortgage reforms in force: $1.5M insured price cap, 30-year amortization (effective December 15, 2024). Checked .
- Government of Ontario — Calculating land transfer tax. Checked .
- Government of Ontario — Land transfer tax refunds for first-time homebuyers. Checked .