# The Pros and Cons of Using a Mortgage Calculator

This piece was originally published on October 21, 2019, and was updated on October 26, 2022.

If you’re an aspiring first-time homebuyer, you might be wondering where to start. It can be intimidating navigating the confusing world of mortgages and real estate and there’s a lot of conflicting information available. Should you call a mortgage broker? Should you call a real estate agent? Maybe visit the bank? Well, one place you can start is online with a mortgage affordability calculator. So, what are they and how do they work?

## What is a mortgage calculator?

A mortgage affordability calculator is exactly as the name describes: A calculator for determining how much mortgage you can afford. They’re quick and easy to use and, before you know it, you’ll have an idea about how much house you can afford. Let’s take a deeper look into how they work.

## How do I use a mortgage calculator?

First, you’ll need to know how much your household earns, pre-tax. If you’re single, that would be your salary. If you have a partner, and are purchasing a home with them, that would be your combined income. For our example purposes, we’ll assume you have a household income of \$90,000.

So, using Ratehub.ca’s mortgage affordability calculator, you would first start by inputting your income. Next, you would input any debts you may have (debt levels impact your mortgage affordability) and living costs (property tax, heating costs, and condo fees). Don’t worry, if you’re unsure what your expected living costs are, the intuitive calculator can estimate those for you.

For our purposes, we’ll assume zero debts and allow the calculator to estimate living costs. Once you’ve typed in your details, click “how much can I afford.”

And voila!

According to the mortgage affordability calculator, you could qualify for a home that costs \$504,922. However, the calculator allows you to go even deeper to determine how much your mortgage will cost you each month.

To do this, you’ll need to know how much you plan to put down as a down payment. We’ll assume you’ve got the required 20% — in this case \$100,984 — so that you can avoid paying mortgage default insurance. You’ll also need to have an idea about what kind of mortgage you want and what rate you might qualify for. For our purposes, we’ll assume you want a 5-year fixed rate and can qualify for the best mortgage rate in Canada. Which, at press time, is 5.19%. We’ll also assume an amortization period of 30 years. If you wanted to specifically see how different amortization period lengths might affect your monthly payments over time, you can also use our amortization calculator to help you test out different amortization scenarios.

Your total mortgage payments, using our estimates, would be \$2,202 per month.

Finally, the calculator tells you how much cash you’ll need — in addition to your down payment — to buy the home. According to our estimates that would be \$110,587.

And that’s what makes a mortgage affordability calculator in Canada so useful: They can give you an educated idea about how much house you can afford and what it will cost you up-front and monthly. But, they aren’t perfect. So we’ve put together a handy pro/con list for you.

## The bottom line

So, like we said, they aren’t perfect. But they are a great tool and a great first step in your home buying journey. And remember: You can always reach out to a mortgage broker to get a more accurate idea about how much mortgage you can afford.