Find out how much home you can afford based on your income, debts, and down payment using Canadian lending rules and GDS/TDS ratios.
Use our free Canadian home affordability calculator to determine how much house you can afford based on your income, debts, and down payment. This calculator applies the GDS and TDS ratios used by Canadian lenders along with the federal mortgage stress test to give you a realistic picture of your maximum purchase price in BC.
Canadian lenders use two key ratios to determine how much mortgage you qualify for:
The more restrictive of these two ratios determines your maximum borrowing capacity. For example, if your GDS allows a $3,500 mortgage payment but your TDS (due to existing debts) only allows $3,000, the lender will use the $3,000 figure.
Since 2018, all federally regulated lenders in Canada require borrowers to qualify at a stress test rate, which is the higher of:
This means even if your actual mortgage rate is 4.5%, you must qualify as if it were 6.5%. The stress test is designed to ensure you can still afford your payments if interest rates rise. This calculator automatically applies the stress test to your affordability estimate.
Here are some general guidelines based on annual household income with a 20% down payment, 25-year amortization, and typical debt levels:
| Annual Income | Approx. Max Purchase Price | Monthly Payment (est.) |
|---|---|---|
| $60,000 | $280,000 - $320,000 | $1,250 - $1,450 |
| $80,000 | $380,000 - $440,000 | $1,700 - $1,950 |
| $100,000 | $480,000 - $560,000 | $2,100 - $2,450 |
| $120,000 | $580,000 - $680,000 | $2,550 - $2,950 |
| $150,000 | $730,000 - $850,000 | $3,200 - $3,700 |
| $200,000 | $980,000 - $1,150,000 | $4,300 - $5,000 |
Estimates assume 5.5% interest rate, 25-year amortization, $500/month in other debts, and 20% down payment. Actual amounts vary by lender and individual financial situation.
Reducing monthly debt payments lowers your TDS ratio, allowing you to qualify for a larger mortgage. Focus on high-interest debts first.
A bigger down payment means a smaller mortgage, lower monthly payments, and potentially avoiding CMHC insurance premiums.
Combining household incomes significantly increases your borrowing capacity. Two incomes of $70,000 qualify for far more than one income of $70,000.
Choosing a 30-year amortization (requires 20%+ down) lowers monthly payments and may increase the home price you qualify for.
Programs like the FHSA, HBP (RRSP withdrawal), and BC first-time buyer PTT exemption can help boost your budget.
A higher credit score can qualify you for better mortgage rates, effectively increasing how much home you can afford over the life of the loan.
Every buyer's financial situation is unique. I work with trusted mortgage brokers who can provide a detailed pre-approval based on your complete financial picture. Understanding your true buying power is the first step to finding your perfect home in BC. Let's discuss your home buying goals.
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