Canada Home affordability calculator

How affordability is calculated

This calculator uses the 28/36 rule — the underwriting heuristic most lenders apply to determine the largest mortgage they'll approve:

• 28% front-end ratio: total monthly housing payment (PITI = principal + interest + property tax + insurance, plus HOA) should be no more than 28% of gross monthly income.
• 36% back-end ratio: total monthly debt payments (housing + car loans + student loans + minimum credit card payments + child support) should be no more than 36% of gross monthly income.

Whichever limit you hit first becomes your maximum housing payment. From there we back out the mortgage size at the rate you entered, add your down payment, and the total is your maximum purchase price.

Worked example

$90,000 gross income, $400/month existing debt, 6.5% rate, $40,000 down payment:

• Front-end limit: 28% × $7,500 = $2,100/month for PITI
• Back-end limit: 36% × $7,500 − $400 = $2,300/month for housing
• The front-end limit binds. Subtract estimated tax and insurance (~$400–$600/month), leaving ~$1,600 for P&I.
• At 6.5% over 30 years, $1,600/month finances about $253,000 → plus $40,000 down → roughly $293,000 maximum purchase price.

How down payment shifts the answer

A larger down payment increases your maximum purchase price two ways: it reduces the financed amount (smaller monthly payment for the same price) and pushes you past the 20% threshold that removes PMI (~0.5–1% of loan annually). Going from 10% to 20% down on a $300,000 home commonly raises affordability by $20,000–$30,000.

How rate shifts the answer

At a 1-percentage-point higher rate (7.5% vs 6.5%), the same $1,600/month finances only about $229,000 instead of $253,000 — roughly a $24,000 hit to your maximum price. Rate moves matter more than most buyers expect.

Common mistakes

• Counting bonuses as recurring income. Lenders typically require a 2-year history of bonuses and average them.
• Forgetting cosigned debts. Cosigned loans count against your DTI even if someone else pays them.
• Using net pay instead of gross. The 28/36 rule uses gross income, not take-home.
• Stretching to the absolute max. Qualifying for a number doesn't mean you should buy there — leave headroom for emergencies and retirement saving.

What this calculator doesn't cover

• Lender-specific overlays (some lenders enforce stricter ratios than 28/36)
• Credit-score-driven rate adjustments
• Variable-rate or interest-only mortgage products
• Government-backed loan programmes (FHA, VA, USDA, Help to Buy, First Home Buyer schemes)
• Specific income types like rental income, self-employment, or commission