How Much Mortgage Can I Afford in Canada (2026)?

"How much mortgage can I afford?" is the question that shapes your entire home search. The answer isn't a gut feeling — Canadian lenders use two specific ratios plus a stress test to set your maximum. Once you understand them, you can estimate your own number and avoid falling for a home outside your range.

The short answer

Lenders cap how much you can borrow using two debt-service ratios: your housing costs should stay under about 39% of gross income (GDS) and your total debt payments under about 44% (TDS). You must also qualify at the stress-test rate — the greater of your contract rate plus 2% or 5.25%. Your down payment, existing debts, and property costs all move the final number. Run your affordability now.

The two ratios lenders use

GDS — Gross Debt Service

The share of your gross monthly income that goes to housing: mortgage payment, property tax, heat, and (if applicable) half of condo fees. Lenders generally want this under about 39%.

TDS — Total Debt Service

The share of your gross income for housing plus all other debt payments — car loans, credit cards, lines of credit, student loans. Lenders generally want this under about 44%.

Whichever ratio binds first sets your limit, which is why paying down other debts can increase your mortgage room.

The stress test raises the bar

You don't qualify at your actual rate — you qualify at the greater of your contract rate plus 2% or the 5.25% benchmark. This proves you could handle higher payments and is the single biggest reason your approved amount is lower than a simple rate-times-income guess. Full detail in the mortgage stress test explained; test yours with the stress-test calculator.

What moves your number

• Down payment: more down = a smaller mortgage and lower ratios. See how much down payment you need.
• Other debts: every monthly payment eats into your TDS. Paying off a car loan can unlock meaningful mortgage room.
• Property costs: high property taxes or condo fees reduce how much mortgage fits within GDS.
• Income type: salaried income is simplest; self-employed income is assessed differently.
• Credit: a strong score (680+) keeps you at prime lenders and better rates.

A worked example

Suppose your household earns $120,000 gross ($10,000/month). At a 39% GDS limit, about $3,900/month can go to housing. Subtract estimated property tax and heat, and the rest supports your mortgage payment — calculated at the stress-test rate, not your contract rate. Add your down payment to that supported mortgage and you have your price range. Other debts then test against the 44% TDS cap. The affordability calculator does this math instantly.

Affordable vs. approved

A lender's maximum is a ceiling, not a target. Borrowing the full amount can leave you "house poor." Build in a buffer for rate increases at renewal, maintenance, and life — especially in 2026's uncertain economy (see the 2026 outlook). Then get pre-approved to confirm your real number.

Frequently asked questions

What percentage of income should go to a mortgage in Canada?

Lenders cap housing costs at about 39% of gross income (GDS) and total debt at about 44% (TDS). Many advisors suggest staying comfortably below those limits.

How does the stress test affect what I can afford?

You must qualify at the greater of your contract rate plus 2% or 5.25%, which lowers your maximum mortgage compared to your actual rate — it's a buffer against future rate increases.

Will paying off debt increase my mortgage approval?

Often yes. Reducing monthly debt payments lowers your TDS ratio, which can free up significant mortgage room if TDS was your binding limit.

How much income do I need for a specific home price?

It depends on your down payment, debts, property costs, and rate, but the affordability calculator reverses the math to show the income needed for a given price.

Want your real number? Talk to us or run the affordability calculator — we'll factor in your down payment, debts, and the stress test to set an honest budget.