How Much Mortgage Can You Afford in Canada?

How much you can afford is not the same as the maximum a lender will approve.

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated: 2026-09-16

Affordability is a range, not a single number

There are two different questions hiding inside the phrase how much can I afford. One is what a lender will approve. The other is what you can carry without straining your budget. Those answers are often different, and the gap between them is where trouble starts.

A lender looks at capacity to repay under its own rules. You should also look at what happens if your income dips, your car breaks down or rates rise. A mortgage that is comfortable on a good month can become a burden in a bad one.

What lenders assess

Every application comes down to the same building blocks. Lenders want to see that you have stable income, a manageable level of existing debt, a down payment that meets the rules, and a credit history that suggests you repay what you owe. Employment type matters too, since a salaried job and self-employment income are documented and treated differently.

How debt service ratios work

Lenders compare your housing costs to your gross income, and then compare your total debt payments to your gross income. The first measure looks at the home itself: mortgage payment, property taxes, heating and, where applicable, half of condo fees. The second adds every other debt payment you carry, from credit cards to car loans to student debt.

These ratios are the spine of mortgage underwriting. A higher income or a smaller debt load improves them. Carrying a large credit card balance or a big vehicle payment can quietly cut how much mortgage you qualify for, even if your salary looks strong. Exact thresholds are set by each lender and are not a guarantee of approval, so treat any ratio you see online as a rough guide only.

The stress test sets your ceiling

Federally regulated lenders must qualify you at a minimum qualifying rate, which is the greater of your contract rate plus two percentage points or 5.25%, under OSFI Guideline B-20. In plain terms, you have to show you could still afford the payments if your rate were higher than the one you are offered.

The stress test does not change the payment you actually make at first. It changes how much you can borrow, because the lender measures your capacity using the higher qualifying rate. Two buyers with the same income and debts can qualify for different amounts depending on how the lender applies its rules, so it pays to ask how the qualifying rate is being used in your file.

Down payment and default insurance

The size of your down payment changes both the loan amount and the rules that apply. The federal minimum is 5% on the portion of the price up to $500,000, 10% on the portion from $500,000 to $1,500,000, and 20% on any portion above $1,500,000. A down payment below 20% means the mortgage must be insured, and the maximum amortization for an insured mortgage is 25 years.

A larger down payment reduces the balance you have to carry and can remove the insurance requirement, which lowers the cost of borrowing. It also strengthens your offer when you are competing for a property, because sellers and their agents see fewer financing conditions.

Amortization and payment size

The amortization spreads the loan over more years, which lowers each payment but increases the total interest paid. A shorter amortization builds equity faster and costs less overall, but the payment is higher. When you test a number, look at both the monthly payment and the total interest across the whole amortization, not just the amount that leaves your account each month.

Costs beyond the mortgage payment

Owning a home costs more than the mortgage. Property taxes, home insurance, utilities, maintenance and, for condos, monthly fees all compete for the same income. A common mistake is to stretch to the maximum mortgage and then discover that the property itself eats the rest of the budget. Set aside a realistic amount for repairs and upkeep, because roofs, furnaces and appliances do not last forever.

A step by step way to estimate affordability

1. Add up your gross monthly household income from all stable sources.
2. List every recurring debt payment and total them.
3. Estimate housing costs for the kind of home you want, including taxes, heating and condo fees.
4. Apply the federal stress test rate to see how the payment looks at the qualifying rate.
5. Subtract your total obligations from income to see what is left for savings and daily living.
6. Decide how much of that leftover you are genuinely willing to commit to a mortgage.
7. Compare that comfortable figure with what a lender is willing to approve.

Running those numbers with a calculator is faster than guessing, and it gives you a target to take to a mortgage professional.

Approval is not the same as comfort

A lender approval is a ceiling, not a recommendation. Borrowing to the maximum leaves no cushion for a rate increase at renewal, a period of reduced income or an unexpected repair. A payment that fits comfortably today is easier to keep through a job change, a new baby or a rise in the cost of living.

A useful rule of thumb is to leave breathing room between the payment you can technically afford and the payment you actually take on. That gap is your protection.

Getting pre-approved

A pre-approval gives you a clearer picture of your borrowing range and often holds a rate for a set period while you shop. It is not a guarantee of final approval, because the lender still reviews the property and confirms your details. Even so, it turns an abstract budget into a realistic price range and makes you a stronger buyer. Promissory.ca is not a lender or a mortgage broker and charges consumers no fee; it may receive compensation from lending partners. A licensed mortgage professional can confirm what you qualify for.