Mortgage Affordability Calculator

Before you start shopping for a home, it's important to understand not just how much mortgage you can qualify for, but how much home you can realistically afford. While lenders use income, debt levels, and housing costs to determine your borrowing limit, affordability is ultimately about finding a home that fits comfortably within your budget and long-term financial goals.

Let’s explore how mortgage affordability is calculated in Canada, what lenders look for when assessing your application, and the steps you can take to increase your purchasing power.

June 2026 Canadian mortgage affordability update

In May 2026, home affordability worsened in every major Canadian housing market tracked by Ratehub.ca, marking a broad deterioration in buying conditions across the country. The report found that all 13 cities analyzed became less affordable compared to April, as a combination of rising home prices and slightly higher mortgage rates increased the income needed to qualify for a mortgage. The average five-year fixed mortgage rate used in the study increased to 4.49% from 4.47% in April, pushing the mortgage stress test rate up to 6.49%. While these increases were modest, together they were enough to erode affordability in every market examined.

St. John's experienced the largest decline in affordability among the cities studied. The average home price increased by $13,900 to $414,200, requiring prospective buyers to earn an additional $2,800 annually to qualify for a mortgage. Monthly mortgage payments also increased by $75, or roughly $900 per year, compared to April. Hamilton recorded the second-largest affordability decline, with average home prices rising by $6,400 to $744,000. Buyers in Hamilton needed an additional $1,480 in annual income to qualify, while monthly mortgage payments increased by $40. 

At the other end of the spectrum, Montréal experienced the smallest change in affordability. The average home price declined by $1,000 to $593,400, but the slight increase in mortgage rates offset any benefit to buyers. As a result, the income required to purchase the average home increased by just $10, while monthly mortgage payments rose by only $1.

How to use the mortgage affordability calculator

Step 1: Start by entering your annual income, your co-applicant's income (if applicable), your down payment amount, and the location of your future home. You'll also be asked to select an amortization period.

Step 2: Enter expenses such as property taxes, condo fees, and heating costs, along with any existing debt payments, including credit cards, car loans, and other loans. If you don't know your housing costs, the calculator can estimate them for you.

Step 3: Based on the information you provide, the calculator will estimate the maximum home price you can afford and the total mortgage amount required.

Step 4: Adjust your mortgage rate, amortization period, down payment, and payment frequency to see how they affect your mortgage payment and affordability.

Step 5: The calculator also estimates your required cash to close, including your down payment, mortgage default insurance (if applicable), and closing costs, as well as your ongoing monthly housing expenses.

How much mortgage can I afford?

The amount of mortgage you can afford is the amount you can comfortably borrow and repay while still meeting your other financial goals. When determining how much home you can realistically afford, consider:

• Your monthly take-home income
• Your savings and emergency fund
• Your down payment
• Existing debt payments, such as car loans or student loans
• Ongoing homeownership costs, including property taxes, utilities, insurance, maintenance, and condo fees
• Future financial goals, such as retirement savings, travel, or starting a family

A common mistake is to shop for homes based solely on the maximum amount a lender is willing to approve. Instead, focus on a mortgage payment that leaves room in your budget for both expected expenses and unexpected costs. The mortgage affordability calculator above can help you estimate a home price range that aligns with your financial circumstances.

How lenders determine mortgage affordability

While personal affordability is based on your budget and financial goals, lenders use specific qualification criteria to determine how much you can borrow. Most lenders assess affordability using two debt service ratios:

In addition to these ratios, lenders also consider:

• Income: Employment income, bonuses, commissions, rental income, and other eligible sources of income.
• Down payment: A larger down payment reduces the amount you need to borrow and can increase the amount you may qualify for.
• Credit history and score: Lenders review your credit history to assess how responsibly you've managed debt in the past.
• The mortgage stress test: Most borrowers must qualify at the greater of their contract rate plus 2% or 5.25%, helping ensure they can continue making mortgage payments if interest rates rise.