Mortgage Affordability Calculator Canada — GDS, TDS & Stress Test

Canadian lenders don't approve you at the rate you'll pay — they approve you at a higher qualifying rate, and they cap your borrowing using two debt ratios. This calculator applies the same rules, so the number you see is the number a lender would arrive at.

The stress test, in plain terms

Since 2018, federally regulated Canadian lenders must qualify you at the greater of your contract rate plus 2%, or 5.25% — whichever is higher. The rule comes from OSFI's Guideline B-20.

So if you're offered 4.79%, the lender checks whether you could afford the payment at 6.79%. You'll pay the lower rate; you must qualify at the higher one. The calculator shows both payments, and the gap between them is what the stress test is protecting against — a renewal at materially higher rates in five years' time.

People often see this as an obstacle. It's worth noting that households who bought at 2% in 2021 and renewed at 6% in 2026 largely coped precisely because they'd been qualified at around 4.75%.

The two ratios that cap your borrowing

GDS — Gross Debt Service. Your housing costs as a share of gross income: mortgage payment, property tax, heating, and half of any condo fees. Limit is 32% (lenders often allow up to 39% on insured mortgages with strong credit).

TDS — Total Debt Service. Everything in GDS plus all your other debt payments: car loans, student loans, lines of credit, and roughly 3% of your credit card balances. Limit is 40% (up to 44% insured).

Your approval is whichever ratio binds first. The "limiting factor" figure tells you which one is holding you back — and that determines what actually helps. If TDS is the constraint, paying off a car loan raises your buying power far more than saving another few thousand for the down payment.

What a car loan really costs you — and where the saving stops

While TDS is your binding ratio, every $100 of monthly debt payment removes $100 of mortgage capacity — which at a 6.79% qualifying rate over 25 years is about $14,500 of mortgage. On that basis a $650 car payment looks like it's costing you roughly $95,000 of house.

But it usually isn't, and this is where most affordability advice goes wrong. Clearing debt only helps until GDS becomes the constraint — after that, your housing costs alone are the ceiling and paying off more debt changes nothing.

Work through the calculator's default figures. On $140,000 of income with $4,200 of property tax:

GDS caps housing costs at $4,050/month, full stop.
With a $650 car payment, TDS allows only $3,983 — so TDS binds, and you're $67 short of the GDS ceiling.
Clear the car loan entirely and you reach $4,050 — a gain of $67/month, or about $9,700 of purchase price. Not $95,000.

So the honest advice is: check the "limiting factor" first. If it says TDS, paying down debt genuinely buys you house — up to the point where GDS takes over. If it already says GDS, your income and property taxes are the constraint, and clearing debt won't raise your approval by a dollar. That's the difference between a rule of thumb and your actual situation.

Approval is a ceiling, not a target

Lenders assess gross income; you live on net. At a 32% GDS on gross income, your housing cost can easily reach 45% or more of actual take-home pay — before furniture, maintenance, or the fact that owning costs more than renting in ways nobody warns you about.

A common and sensible practice is to borrow meaningfully less than the maximum. Work out the payment you're genuinely comfortable with, then use the Canadian mortgage calculator to find the price that produces it.

Frequently asked questions

Does the stress test apply to credit unions?

Provincially regulated credit unions aren't bound by OSFI's B-20, so some apply their own, sometimes gentler, standards. Alternative and private lenders may too — but they generally charge higher rates, which erodes the benefit. Federally regulated banks, which is most of the market, must apply it.

Why is my pre-approval different from this figure?

Lenders differ on what income they'll count — bonus, commission, self-employment and rental income are all treated conservatively and often averaged over two years. Your credit score also moves the allowable ratios. Treat this as a well-informed estimate; a lender's own pre-approval is the authoritative number.

Can I use rental income from a basement suite?

Often yes, but discounted — many lenders count 50–80% of documented rental income, and some require a signed lease or an appraiser's market rent opinion. A legal, permitted suite is treated far more generously than an unregistered one.

How do lenders count credit card debt?

Typically 3% of the outstanding balance as a monthly obligation, regardless of what you actually pay. A $10,000 balance therefore counts as $300 a month against your TDS — which, by the arithmetic above, is roughly $42,000 of lost purchase price. Paying cards down before applying has an outsized effect.

Does a co-signer help?

Yes — a co-signer's income is added and their debts counted, which usually raises the maximum. It's a serious commitment: they're fully liable for the mortgage and it appears on their credit file, affecting their own borrowing. Both parties should get independent advice first.