Last reviewed: November 1, 2026 · MortgageCompass Editorial Team · How we research
In Canada, the mortgage you can afford is the lowest of three ceilings: what a lender will approve under the stress test, what your savings can cover at closing, and what you can pay every month and still live comfortably.
Which ceiling is lowest differs from household to household, and it is often not the lender’s. The calculator below finds all three for your numbers.
The rules in November 2026
The policy rate rose by 0.25 points on October 28, 2026, and big-bank prime rates moved with it, so variable-rate payments and their stress-test rates went up. Fixed rates follow bond yields and may move differently; check today’s offers in our Canadian mortgage rates guide.
Ceiling 1: what a lender will approve
Lender ceilingCanadian lenders look at two ratios, calculated with your gross household income and a payment worked out at the stress-test rate, not the rate you will actually pay:
Gross debt service (GDS)
39%(mortgage payment + property tax + heating + 50% of condo fees) ÷ gross monthly incomeTotal debt service (TDS)
44%(everything in GDS + car loans, credit cards, lines of credit, student loans) ÷ gross monthly incomeA worked example: a household earning $120,000 with $400 a month of other debts, $350 a month of property tax and $120 of heating, at a 4.59% five-year fixed rate. The stress test uses 6.59%. TDS is the tighter limit here, leaving about $3,430 a month for the mortgage payment, which supports a loan of roughly $508,000 over 25 years or $543,000 over 30 years. Canadian fixed-rate mortgages compound semi-annually, and our figures follow that rule.
Two details catch people out. A 30-year amortization on an insured mortgage (less than 20% down) is only available to first-time buyers and buyers of new builds, since December 15, 2024. And with 20% or more down, federally regulated lenders still apply the stress test under OSFI’s Guideline B-20. Our stress test guide walks through a full pass-or-fail case.
Ceiling 2: what your savings can cover
Cash ceilingYour savings have to pay the down payment and the closing costs, and the minimum down payment rises with the price:
| Purchase price | Minimum down payment | Example | Default insurance |
|---|---|---|---|
| Up to $500,000 | 5% | $450,000 home: $22,500 | Required under 20% down |
| $500,000 to $1.5 million | 5% of the first $500,000, 10% of the rest | $800,000 home: $55,000 | Required under 20% down |
| $1.5 million or more | 20% | $1.6 million home: $320,000 | Not available |
CMHC premiums are added to the loan: 4.00% of the loan with less than 10% down, 3.10% with 10% to 14.99%, and 2.80% with 15% to 19.99%.
Then come closing costs, which CMHC suggests budgeting at 1.5% to 4% of the price. The biggest is usually land transfer tax, and it depends heavily on where you buy. On a $700,000 home:
Our calculations from the published rates, for a resale home. Other provinces have their own taxes or fees.
One more cash item is easy to miss: in Ontario, Quebec and Saskatchewan, provincial sales tax applies to the mortgage insurance premium (8%, 9% and 6%) and must be paid in cash at closing. On a $500,000 home with 5% down, the premium is $19,000 and the Ontario tax on it is $1,520, due in cash.
Ceiling 3: what you can live with
Comfort ceilingThe ratios use gross income and ignore most of your real life. A lender approval at 39% of gross income can mean more than half of your take-home pay going to housing. Before you take the maximum, add up what the ratios leave out:
- Income tax and payroll deductions
- Childcare, groceries, transport and insurance
- Maintenance and repairs on the home
- Retirement and emergency savings
- Higher payments at renewal if rates rise
- A gap in income from parental leave or job changes
There is no official comfort rule. In the calculator, you choose the share of gross income you are willing to spend on the payment, tax, heating and condo fees, at the rate you will actually pay.
Find your three ceilings
Enter your household numbers. The calculator finds the highest price under each ceiling and marks the lowest, which is the realistic number to take to a lender.
Assumes a resale home, semi-annual compounding, fixed property tax and heating, CMHC premiums and limits, and land transfer tax for the listed provinces (first-time buyer refunds or exemptions when you answer Yes). Toronto prices above $3 million and other provinces’ taxes are not modelled. Lenders apply their own policies.
How to raise each ceiling
Lender ceiling
- Pay off a car loan or card balance before applying; it lowers TDS.
- Use a 30-year amortization if you qualify.
- Add a co-borrower’s income.
- Choose a home with lower condo fees or taxes.
Cash ceiling
- Use the FHSA and the RRSP Home Buyers’ Plan.
- Claim first-time buyer land transfer tax refunds.
- Look just below price thresholds, such as $500,000 or BC’s $835,000.
- Keep a cushion for moving and repairs.
Comfort ceiling
- Build a budget on take-home pay, not gross.
- Test the payment at a rate 1 to 2 points higher for renewal.
- Run the numbers with one income for a few months.
- Leave room to keep saving.
Questions Canadians ask
How much mortgage can I get on $100,000 a year?
It depends on your debts, rate and costs. With no other debts, $350 property tax, $120 heating and a 4.59% rate tested at 6.59%, GDS allows about $2,780 a month for the payment, roughly $410,000 over 25 years. Try your own numbers in the calculator.
Does the stress test apply if I put 20% down?
Yes, with federally regulated lenders under OSFI’s Guideline B-20. Switching lenders at renewal without increasing the amount or amortization does not require a new stress test.
Is the CMHC premium paid in cash?
No, it is usually added to the mortgage. The provincial sales tax on it, in Ontario, Quebec and Saskatchewan, must be paid in cash at closing.
Did the October 2026 rate increase change what I can afford?
For variable-rate borrowers, yes: a higher prime rate means a higher contract rate and a higher stress-test rate. In our worked example, each 0.25-point rise in the qualifying rate cuts the maximum 25-year loan by about $11,000.
Should I borrow the maximum I am approved for?
Only if it also passes your comfort ceiling. Approval tells you what a lender will risk, not what fits your budget.
The bottom line
Your real budget is the lowest of what a lender approves, what your savings can cover and what you are comfortable paying. In 2026 the stress test still adds two points to your rate, closing costs can take a large bite out of savings in Ontario and BC, and the October rate increase has made variable-rate approvals a little tighter.
- Run the calculator with your real income, debts and savings, and note which ceiling is lowest.
- Price the land transfer tax and closing costs for the city you are buying in.
- Get a pre-approval with a rate hold, and compare at least two lenders or a broker.
Related guides
- The Canadian Mortgage Stress Test: One Couple’s Story and How to Pass It
- Best Mortgage Rates in Canada
- Fixed vs Variable Mortgage in Canada
This guide is general information, not financial advice. Figures are estimates based on published rules and rates as of November 1, 2026. Confirm your numbers with a licensed mortgage professional or lender before you make an offer.
Sources
- Bank of Canada, “Bank of Canada raises the policy rate by 25 basis points to 2½%”, October 28, 2026: bankofcanada.ca
- CMHC, “Calculating GDS / TDS”: cmhc-schl.gc.ca
- CMHC, “General requirements to qualify for homeowner mortgage loan insurance” (down payment, $1.5 million limit, closing costs): cmhc-schl.gc.ca
- Government of Ontario, “Calculating land transfer tax” and “Land transfer tax refunds for first-time homebuyers”: ontario.ca
- City of Toronto, “Municipal Land Transfer Tax rebate opportunities”: toronto.ca
- Government of British Columbia, “First time home buyers’ program” (property transfer tax exemption): gov.bc.ca
- Zealty, “Property transfer tax BC: how much will you pay?”, updated August 12, 2026: zealty.ca
- nesto, “Provincial sales tax on mortgage default insurance”, July 2025: nesto.ca
- nesto, “Mortgage rates forecast Canada” (lowest advertised rates and prime, October 2026): nesto.ca