Oakwyn Realty Ltd.

How Much Home Can You Afford?

Enter your income, savings, and debts to calculate your maximum purchase price using standard GDS and TDS debt ratios.

How the Affordability Calculator Works

Our affordability calculator uses two standard lending ratios to determine the maximum home price you can comfortably afford. The Gross Debt Service (GDS) ratio caps your total housing costs — including mortgage payment, property taxes, and heating — at 32% of your gross monthly income. The Total Debt Service (TDS) ratio ensures that all of your monthly debt obligations, including housing costs, car payments, and credit card minimums, do not exceed 40% of your gross income.

The calculator applies the stricter of the two ratios to determine your maximum monthly housing budget, then uses the standard mortgage payment (PMT) formula to back-calculate the largest loan you can support at your chosen interest rate and amortization period. Adding your down payment gives you the maximum affordable purchase price.

Keep in mind that lenders may apply additional qualifying criteria, including a stress test at the Bank of Canada qualifying rate (typically contract rate + 2%) . This tool provides a starting estimate — always consult a mortgage professional for a formal pre-approval.

Frequently Asked Questions

How much house can I afford?
Your maximum purchase price depends on your gross income, existing debts, down payment, and current interest rates. Lenders use debt service ratios to ensure your housing costs stay within a safe percentage of your income. This calculator applies those ratios to estimate the most you can borrow, then adds your down payment to determine your maximum purchase price.
What are GDS and TDS ratios?
GDS (Gross Debt Service) and TDS (Total Debt Service) are the two ratios Canadian lenders use to qualify borrowers. GDS caps your housing costs (mortgage, taxes, heating) at 32% of gross income. TDS caps all debt payments (housing plus car loans, credit cards, etc.) at 40%. In the US, the equivalent is the 28/36 rule: housing at 28% and total debt at 36% of gross income.
How does the down payment affect affordability?
A larger down payment directly increases your maximum purchase price because you need to borrow less. It also reduces your monthly payment and total interest. In Canada, putting down 20% or more eliminates the need for CMHC mortgage insurance, which otherwise adds a premium of 2.8% to 4.0% to your loan balance.
What is the mortgage stress test?
In Canada, federally regulated lenders must qualify borrowers at the higher of their contract rate plus 2% or the Bank of Canada qualifying rate (currently 5.25%). This ensures you can still afford payments if rates rise. The stress test reduces your maximum borrowing power compared to qualifying at the actual contract rate.
Does the calculator include property taxes and insurance?
Yes. The calculator factors in estimated property taxes and home insurance as part of your monthly housing costs. These are included in the GDS/TDS ratio calculations, so the maximum purchase price already accounts for the full cost of ownership — not just the mortgage payment.
How does existing debt affect how much I can borrow?
Every dollar of monthly debt (car payments, student loans, credit card minimums) reduces the amount a lender will let you borrow for a mortgage. Debt is included in the TDS ratio, which caps total debt payments at 40% of gross income. Paying down existing debt before applying is one of the most effective ways to increase your borrowing capacity.