How Much House Can I Afford in Canada?

The price you can afford and the price a lender will approve are two different numbers — and the gap surprises most first-time buyers. In Canada your maximum is set by three things: your down payment, the mortgage stress test, and your debt service ratios. This guide shows how each one works so you can find a number you can actually live with.

Key takeaways

• Lenders qualify you at the greater of your contract rate + 2% or 5.25% — the stress test.
• Aim for a GDS ratio of 39% or less and a TDS ratio of 44% or less.
• Your minimum down payment is 5% under $500,000, scaling up above that.
• Existing debts (car loans, credit cards) directly shrink your maximum mortgage.
• Affordability is about comfort, not just approval — leave room for life.

The three things that set your limit

Affordability in Canada isn't a single formula — it's the lowest number that survives three separate tests. Whichever one limits you most becomes your ceiling.

Let's break down each one. To skip straight to a personalized estimate, run your numbers through the HOMEH affordability calculator.

Your down payment sets the floor

The bigger your down payment, the more home you can buy — and below 20% down you'll also pay mortgage default insurance. Canada's minimum down payment rules are tiered:

• Under $500,000: 5% minimum.
• $500,000–$1,499,999: 5% on the first $500,000, plus 10% on the portion above.
• $1,500,000 or more: 20% minimum (these mortgages can't be insured).

What about insurance?

With less than 20% down you'll pay a CMHC insurance premium (4.00% of the mortgage at 5%–9.99% down, scaling down as your down payment grows). In Ontario, 8% PST on that premium is due at closing. Learn more in our CMHC insurance guide.

The stress test: qualifying at a higher rate

Even if your actual mortgage rate is lower, federally regulated lenders must approve you as though you were paying more. Under OSFI's B-20 rules you have to qualify at the greater of your contract rate + 2% or 5.25%.

This deliberately shrinks the mortgage you qualify for, so you can still cope if rates rise. It's the single biggest reason buyers qualify for less than they expect. Our mortgage stress test explainer walks through it in detail, or take the stress test calculator for a quick read.

Plan for the qualifying rate, not the teaser rate

If you budget based on a low advertised rate but qualify at 5.25% or higher, your comfortable payment and your approved payment can diverge sharply. Build your budget around the stress-tested number.

GDS and TDS: how lenders measure affordability

Lenders use two debt service ratios to decide how much of your income can go toward housing and debt:

GDS covers mortgage, property tax, heating and (for condos) half the condo fees. TDS adds your other debts — car loans, credit cards, student loans, lines of credit. Because TDS includes everything, paying down existing debt is one of the fastest ways to boost how much house you can afford. Dig deeper in our guide to GDS and TDS.

Existing debt is a hidden ceiling

A $500/month car payment can lower your maximum mortgage by tens of thousands of dollars. Clearing high monthly debts before you apply often does more for affordability than a slightly larger down payment.

From approval to comfort

The maximum a lender approves is rarely the amount you should spend. Closing costs (typically 1.5%–4% of price — see closing costs in Ontario), property tax, maintenance, and everyday life all compete with your mortgage payment. A home you can afford on paper but not in practice is a stressful place to live.

Start with the numbers, then sanity-check against your real budget. Use the mortgage calculator to test payments and the full guide to buying a house in Ontario to map the whole journey. First-time buyer? Don't miss the programs you may qualify for.

Buy more home with HOMEH cashback

HOMEH is a licensed Ontario brokerage that gives eligible buyers the industry's highest Cashback Rebate — which can go straight toward your down payment or closing costs. Estimate yours, then see your number with the affordability calculator.