How Much Mortgage Can I Afford? The Short Answer
Most Canadian lenders let you spend up to 39% of gross income on housing costs (the GDS ratio) and 44% on all debts combined (the TDS ratio), calculated at a higher "qualifying" rate rather than your real rate. In practice, a household earning $100,000 with no debts and 20% down can usually qualify for roughly $430,000 to $450,000 in Ontario. The exact figure moves with property tax, heating costs and the qualifying rate.
Here's the part that matters most: approval isn't the same as affordability. The maximum a lender allows is a ceiling, not a target. Later in this guide we'll show you how to set a comfortable number below it.
Four inputs drive the answer:
- Gross income
- Monthly debt payments
- Down payment
- The interest rate used to stress-test the payment
If the vocabulary is new, here's a quick glossary. The principal is the amount you borrow. Amortization is the total number of years it takes to pay the mortgage off, usually 25. The term is the length of your current rate contract, often 5 years. The qualifying rate is the higher rate lenders use to test whether you could handle payments if rates rose. For a fuller primer, read our explainer on what a mortgage is and how it works in Canada.
The figures in this guide are illustrative as of November 2026. Rates, caps and premiums change, so confirm them before you make an offer.
The 6 Criteria Lenders Use to Decide How Much You Can Borrow
Lenders decide your maximum mortgage using six criteria: the stress-test rate (the greater of your contract rate + 2% or 5.25%), the 39% GDS limit, the 44% TDS limit, credit history, income type, and amortization. Here's how each one works.
The stress test. You must qualify at the greater of your contract rate + 2% or 5.25%. A 4.00% contract rate is tested at 6.00%, and a 3.00% rate is tested at 5.25%. At 6.00% over 25 years, each $100,000 borrowed costs about $640 a month for qualifying purposes, versus about $525 at a real 4.00% rate. You can check current Ontario mortgage rates to see what your own test rate would be, and our guide to how mortgage rates are set and applied explains why small rate changes shift your payment so much.
The 39% GDS limit. Mortgage principal and interest, property tax, heat and 50% of condo fees must fit within 39% of gross monthly income. That's why condo fees and Ontario property tax shrink your maximum mortgage.
The 44% TDS limit. Your GDS items plus car loans, student loans, credit card minimums (typically 3% of the balance) and lines of credit must fit within 44%. A $600 monthly car payment can cut borrowing power by roughly $90,000 at a 6% qualifying rate.
Credit score and history. Typical prime lenders look for 680 or higher for the best insured and uninsured pricing. Lower scores usually push borrowers to alternative lenders at higher rates.
Income type and stability. Salaried borrowers use employment letters and pay stubs. Self-employed borrowers usually rely on a 2-year average of Notice of Assessment income, or on stated-income and bank-statement programs through alternative or private lenders. Those programs cost more and often carry fees of 1% to 2%. Our guide to qualifying for a mortgage when you're self-employed covers the options.
Rate and amortization. A 1% rise in the qualifying rate cuts your maximum mortgage by about 9% to 10%. A 30-year amortization (available to first-time buyers and new-build buyers on insured mortgages) lowers qualifying payments, while 25 years is the standard.
Lender type matters too. Banks, credit unions, monolines and private lenders apply the same headline ratios differently, for example in how they count rental income, bonuses or commission. See how different mortgage lenders approve different amounts for more.
Worked Ontario Examples: What Different Incomes Can Afford
With no other debts, a $100,000 income supports roughly a $434,000 mortgage and a $200,000 income roughly $900,000, using a 6.00% qualifying rate, 25-year amortization and the 39% GDS limit. These examples assume Ontario property tax of about 0.8% to 0.9% of home value outside Toronto, and every figure is a rounded estimate.
The table below compares three incomes (monthly GDS limit, tax and heat, and the mortgage that's left).
| Gross income | Monthly GDS limit | Tax and heat | Max mortgage |
|---|---|---|---|
| $70,000 | $2,275 | $350 | About $300,000 |
| $100,000 | $3,250 | $475 | About $434,000 |
| $200,000 | $6,500 | $720 | About $900,000 |
$70,000 income. Monthly income is $5,833, so the GDS limit is about $2,275. After $250 for property tax and $100 for heat, about $1,925 remains for principal and interest, which supports roughly $300,000 of mortgage. A $300,000 home with 5% down is borderline, and a $500 monthly car payment drops borrowing power to roughly $268,000.
$100,000 income. The GDS limit is $3,250 a month. After about $475 for tax and heat, roughly $2,775 is left, supporting about $434,000. A $500,000 home with only 5% down fails, so buyers typically need about 15% down ($75,000) to fit.
$200,000 income. The GDS limit is $6,500 a month. After about $720 for tax and heat, roughly $5,780 remains, which supports about $900,000 of mortgage, or a home near $1.1 million with 20% down.
A $1,000,000 home with 20% down. The $800,000 mortgage has a qualifying payment of about $5,120. Add $650 tax and $150 heat and you reach $5,920, so you need income of about $182,000. Add $600 in condo fees (50% counted) and that rises to roughly $191,000. With an $800 car loan, TDS still keeps the requirement near $185,000.
Remember that actual payments are lower than qualifying payments. At a 4.00% rate, that $800,000 mortgage costs about $4,200 a month. Passing the test isn't the same as budgeting at the test rate.
Down Payment Rules and Ontario Closing Costs That Change Your Number
Canada requires 5% down on the first $500,000, 10% on the portion up to $1.5 million, and 20% on homes of $1.5 million or more. The insured-mortgage price cap rose from $1 million to $1.5 million on December 15, 2024. A 5% down payment on a $600,000 home is therefore $35,000 ($25,000 + $10,000), or 5.83%.
If you put down less than 20%, you pay mortgage insurance, and the premium is added to your mortgage:
- 4.00% for 5% to 9.99% down
- 3.10% for 10% to 14.99% down
- 2.80% for 15% to 19.99% down
A 30-year amortization on an insured mortgage adds a surcharge of about 0.20%. Ontario also charges 8% sales tax on the premium, payable at closing. A conventional mortgage needs 20% or more down and carries no premium, and you can read what a conventional mortgage requires for the details. First-time buyers and new-build buyers may use 30-year amortization on insured mortgages, so confirm current eligibility with your broker.
Closing costs also shape your budget. Ontario land transfer tax on a $1,000,000 home is $16,475, and buying in Toronto adds an equal municipal land transfer tax. First-time buyer rebates are up to $4,000 provincially and up to $4,475 in Toronto. Set aside 1.5% to 4% of the price for closing costs, including legal fees of about $1,500 to $2,500, title insurance of roughly $300 to $500, adjustments and appraisal. Lenders also want proof these funds come from your own savings.
The RRSP Home Buyers' Plan lets eligible first-time buyers withdraw up to $60,000 each from RRSPs toward a down payment, repaid over 15 years. Our RRSP Home Buyers' Plan guide for Ontario and HBP withdrawal rules and limits explain how it can raise your down payment.
Approval vs. Comfort: Build Your Own Affordability Budget
A lender can approve you at 39% of gross income, but 39% of gross is often close to 50% of take-home pay once tax and CPP/EI are removed. That's a tight squeeze for most families.
We suggest a comfort framework instead. Aim to keep total housing costs near 30% to 32% of gross income, or about 35% to 40% of take-home pay. Then build in room for savings, childcare, travel and emergencies.
Don't forget costs lenders don't fully count. Budget roughly 1% of the home's value per year for maintenance, plus utilities and insurance.
Payment frequency matters too. Accelerated bi-weekly payments make the equivalent of one extra monthly payment per year, which shortens amortization and cuts interest. See how bi-weekly versus monthly payments save interest for the numbers.
Finally, stress-test your own budget. Model your payment at your rate + 2% and check whether you could absorb it at renewal. A general affordability calculator can help you play with monthly budgets, though it won't apply the Canadian stress test for you.
Red Flags When Estimating or Being Offered a Mortgage Amount
Not every number you see is reliable. Watch for these warning signs:
- Calculators that skip costs. Tools that ignore the stress test, property tax, heat or condo fees overstate what you can borrow by 10% or more. Many popular tools, including this general affordability calculator, are built for US rules and don't reflect Canadian qualifying.
- Estimates using only your contract rate. Without the greater of rate + 2% or 5.25%, the result won't match a lender's approval.
- Unverified pre-approvals. If no one checks your income, credit or debts, it's only an estimate and can fall through.
- Pressure to borrow the maximum. A credible advisor shows the payment at several price points and encourages you to compare options. Our guide to comparing mortgage offers beyond the rate shows what to look at.
- Rates quoted without the fine print. If penalty terms, prepayment privileges and fees aren't discussed, you don't see the real cost.
- Private or stated-income lenders with no exit plan. Rates of 8% to 12% plus 1% to 2% fees can be a useful short-term bridge, but they're costly if you don't plan to move to a lower rate.
- New debt before closing. Financing a car or furniture between approval and closing can reduce or void your approval.
Mortgage Affordability Checklist: 8 Steps Before You Start House Hunting
Before house hunting: verify income, list debts, stress-test the payment, add tax and heat, confirm down payment and closing costs, set a comfort budget, and obtain a verified pre-approval. In detail:
- Calculate gross monthly income, including your 2-year average if you're self-employed or commission-based.
- List every debt payment and pull your credit report to check for errors.
- Test your payment at the greater of your rate + 2% or 5.25%, and confirm GDS is at or under 39% and TDS at or under 44%.
- Add property tax, heat, 50% of condo fees and insurance to the estimate.
- Confirm your down payment, its source and 90 days of savings history, plus 1.5% to 4% for closing costs.
- Subtract land transfer tax and rebates for your city, and add Toronto's municipal tax if relevant.
- Set your personal comfort budget below the lender maximum.
- Get a verified pre-approval with a rate hold of up to 120 days.
First-time buyers should also review our first-time home buyer mortgage advice for Ontario, a complementary guide on preparing to qualify.
Where to Get Pre-Approved and How We Meet Every Criterion
A broker compares banks, credit unions, monolines and private lenders at once, so your approval amount can differ materially by lender depending on how each treats income, debts and property types. Our guide on how a mortgage broker compares with going to a bank explains the cost side.
At Burns Mortgages, we meet every criterion in this guide. We run the stress test, GDS and TDS math across lenders, show payments at both the qualifying rate and the real rate, and build a comfort budget before you shop. We cover self-employed and alternative-income solutions, down payment planning including the HBP, and Smith Manoeuvre™ strategies for long-term wealth-building.
Our support is education-first and never pushy, and it continues past funding, through renewal and beyond. Clients can also access discounted home and auto insurance through our Sonnet partnership.
Frequently Asked Questions About Mortgage Affordability
Can I afford a 300k house on a $70k salary?
Possibly, but it's tight. At a 6.00% qualifying rate, a $70,000 income gives a 39% GDS limit of about $2,275 a month. After roughly $350 for property tax and heat, about $1,925 is left for the mortgage, which supports around $300,000. A $300,000 home with 5% down needs a mortgage near $296,000 once insurance is added, so any car loan or credit card balance can push you out of range. With a $500 monthly debt payment the limit falls to about $268,000. A larger down payment, a co-borrower, or paying down debt can close the gap.
Can I afford a 500k house with $100k salary?
Yes, but usually only with a larger down payment. A $100,000 income supports about $434,000 of mortgage at a 6.00% qualifying rate with no other debts and about $475 for tax and heat. A $500,000 home with 5% down needs a mortgage near $494,000 including insurance, which is too high. With roughly 15% down ($75,000), the insured mortgage is about $437,000, which is around the limit. Car loans or condo fees would reduce this further.
Can I afford a mortgage with a $200,000 salary?
Yes. A $200,000 income gives a GDS limit of about $6,500 a month. After roughly $720 for property tax and heat, about $5,780 is left, which supports a mortgage of around $900,000 at a 6.00% qualifying rate over 25 years. With 20% down, that's a home near $1.1 million. Large debts, high condo fees or a lower down payment will reduce this, and your comfortable budget may be lower than the lender maximum.
What salary to afford a $1,000,000 house?
A $1,000,000 Ontario home with 20% down typically requires household income of about $182,000 to $191,000. With $200,000 down and an $800,000 mortgage, the qualifying payment at 6.00% over 25 years is about $5,120 a month. Adding roughly $650 for property tax and $150 for heat gives $5,920, so you need about $182,000 in gross household income. With $600 in monthly condo fees (half counted), that rises to about $191,000. Closing costs can add around $16,475 in Ontario land transfer tax, and the same again in Toronto, before rebates and legal fees.