Mortgage Affordability Calculator Ontario

Important note

This tool uses your actual rate and a flat 32% housing-cost rule. A real lender’s qualification is stricter in three ways: the federal stress test makes you qualify at the higher of your contract rate plus 2% or the 5.25% benchmark rate; the lender counts property tax and heating, not just the mortgage payment, in your housing costs; and a second ratio, TDS, caps all of your debt payments together near 44% of gross income. Expect a bank’s maximum to come in below the figure above — treat this page as the optimistic end of the range.

How this affordability calculator works

This calculator answers a narrower question than a bank would: given your income and existing debts, what housing payment fits a simple 32% rule? First, it computes the illustrative payment limit: (annual income ÷ 12) × 0.32 − monthly debt payments. The 32% figure mirrors the gross debt service (GDS) benchmark Canadian lenders start from; the debts subtracted include car loans, minimum credit card payments and student loans. If debts eat the whole allowance, the limit floors at zero. Second, it inverts the standard amortization formula to find the largest mortgage that payment can service: mortgage = housing payment ÷ mortgagePayment($1, rate, years) — the same M = P × r(1+r)^n ÷ ((1+r)^n − 1) formula solved for P, with r = annual rate ÷ 100 ÷ 12 and n = years × 12. Third, it adds your planned down payment to reach the illustrative home price. This is not a lender qualification, which uses the higher of the contract rate or a stress-test qualifying rate, counts property taxes and heating in the housing cost, and applies separate GDS and TDS caps — so treat this as a planning range, not a pre-approval.

A worked example

Take a household with $100,000 in gross income, $500 per month in existing debts, a 4.5% rate, a 25-year amortization and a $100,000 down payment. Monthly income is $8,333.33; 32% of that is $2,666.67; minus $500 of debts leaves a housing payment limit of $2,166.67 per month. The amortization factor for 4.5% over 25 years is about 0.0055583 per borrowed dollar per month, so the mortgage is $2,166.67 ÷ 0.0055583 ≈ $389,806. Add the down payment: the illustrative home price is about $489,806. Now change one input and watch the mechanics: raising the monthly debts from $500 to $1,500 cuts the limit to $1,166.67 and the mortgage to about $209,895 — roughly $180,000 less house — because every dollar of monthly debt removes a dollar from the 32% allowance. Paying down a car loan before house-hunting can do more for your buying power than a small raise.

Three tips for getting the most from this tool

• Enter real minimum debt payments — card minimums and lines of credit included. Lenders count them all.
• Re-run the numbers at a rate two points above your quoted rate. Lenders qualify near a stress-test rate, so this shows the gap between what you can carry and what you will be approved for.
• Use the down payment field as your price lever. Every extra dollar of down payment raises the affordable home price one-for-one without raising the payment — which is why saving longer can beat stretching your budget.