The price a Canadian lender would approve, worked out the way lenders do it: the stress test rate rather than your rate, the 39% and 44% debt service limits, and the minimum down payment tiers.
Lenders do not work out affordability from a multiple of income. They work backwards from two ratios. Gross debt service is the share of your income that housing takes, counting the mortgage payment, the property tax, heat and half of any condo fee, and it is capped at 39%. Total debt service adds every other payment you make, and it is capped at 44%. Whichever binds first sets the price.
On top of that sits the stress test. The payment used in those ratios is not calculated at the rate you were quoted: it is calculated at the greater of that rate plus two percentage points or 5.25%. That single rule is usually worth tens of thousands of dollars of buying power, and this page shows how much it is costing you rather than quietly applying it.
Common questions
- What is the mortgage stress test in Canada?
- A federal rule requiring you to qualify at the greater of your contract rate plus two percentage points, or 5.25%. It does not change your actual payment, only the payment used to decide how much you can borrow. Since late 2024 it no longer applies to a straight switch to a new lender at renewal, where the loan amount and the amortization do not increase.
- What is the minimum down payment in Canada?
- Five percent of the first $500,000, ten percent of the portion between $500,000 and $1,500,000, and twenty percent of the whole price at $1,500,000 or more. Mortgage insurance is not available at $1.5 million or above, so twenty percent is not optional there.
- Can I get a 30-year amortization?
- On an insured mortgage, only if your down payment is under 20% and you are either a first-time buyer or buying a newly built home. Otherwise an insured mortgage is capped at 25 years. With 20% or more down the mortgage is not insured and 30 years is generally available. The longer amortization lowers the payment, raises the total interest, and adds 0.20% to the insurance premium.
- Do lenders count my credit card balance?
- Yes, at roughly 3% of the balance a month, whether or not that is what you pay. A $10,000 balance is treated as a $300 monthly obligation against your total debt service, which is often the difference between qualifying and not.