One of the most common questions Canadian homebuyers ask in 2026 is simple but critically important: How much house can I actually afford? The answer depends on four interconnected variables — your income, existing debts, down payment, and the stress test qualifying rate. This guide walks through the exact calculation lenders use, with real income-to-mortgage tables for Ontario buyers.
The Two Ratios That Determine Your Mortgage
Every Canadian lender — bank or broker — qualifies you using two debt service ratios:
- GDS (Gross Debt Service Ratio): The percentage of your gross monthly income going toward housing costs — mortgage principal + interest + property taxes + heating (+ 50% of condo fees if applicable). Maximum: 39% for most lenders (32% for insured mortgages under some guidelines).
- TDS (Total Debt Service Ratio): GDS plus all other monthly debt payments — car loans, student debt, credit card minimums, other mortgages. Maximum: 44% for most lenders.
Both ratios are applied at the stress test rate (your contract rate + 2%, or 5.25% minimum) — not your actual rate. This is what reduces your qualifying power compared to what you’d get if calculated at your real contract rate.
Maximum Mortgage by Household Income (2026)
Assumptions: stress test rate 5.99%, 25-year amortization, property tax $400/month, heating $150/month, no existing debts.
| Annual Household Income | Max Mortgage (GDS 39%) | Max Purchase Price (10% down) | Max Purchase Price (20% down) |
|---|---|---|---|
| $70,000 | ~$310,000 | ~$344,000 | ~$387,500 |
| $90,000 | ~$415,000 | ~$461,000 | ~$518,750 |
| $120,000 | ~$568,000 | ~$631,000 | ~$710,000 |
| $150,000 | ~$722,000 | ~$802,000 | ~$902,500 |
| $180,000 | ~$876,000 | ~$973,000 | ~$1,095,000 |
| $220,000 | ~$1,085,000 | ~$1,206,000 | ~$1,356,000 |
Estimates use 5.99% qualifying rate. Actual amounts depend on lender, credit profile, and existing debts. Use as planning guides only.
How Existing Debt Reduces Your Buying Power
Every $500/month in existing debt obligations (car loan, student debt, credit card minimums) reduces your qualifying mortgage by approximately $75,000–$80,000. This is the TDS ratio at work — your total debt picture, not just your mortgage, must fit within 44% of gross income.
| Income | No Existing Debt | $500/mo Car Loan | $1,000/mo Total Debt |
|---|---|---|---|
| $120,000 | ~$568,000 | ~$490,000 | ~$412,000 |
| $160,000 | ~$765,000 | ~$687,000 | ~$609,000 |
How to Increase Your Qualifying Amount
- Add a co-borrower: Combining incomes is the single most impactful move — a partner earning $60,000 added to a $90,000 income file produces a $150,000 qualifying income.
- Pay down existing debts: Eliminating a $500/month car payment before applying adds ~$75,000 to your qualifying mortgage.
- Maximize down payment: More down = smaller mortgage needed — improves your GDS ratio directly.
- Choose 30-year amortization (if eligible): Lowers your monthly payment, improving GDS ratio — though total interest cost rises.
- Include rental income: Buying a property with a legal secondary suite? Rental income can be included (at 50–80% of gross rent) to boost qualifying income at many lenders.
Frequently Asked Questions
What income do I need to buy a $700,000 home in Ontario?
With 10% down ($70,000) and no other debts, you need a household income of approximately $140,000–$150,000 to qualify for a $630,000 mortgage at the 2026 stress test rate of ~5.99%.
Can I get a mortgage on $60,000 income?
On $60,000 income alone, you qualify for approximately $255,000–$275,000 in mortgage — limiting options in most Ontario markets. Adding a co-borrower or maximizing your down payment are the most effective paths to expand purchasing power at this income level.
Use the free mortgage affordability calculator at mrates.ca — enter your income and debts to see your exact qualifying amount.