A realistic maximum based on how Canadian lenders actually qualify you, the GDS and TDS ratios, plus the mortgage stress test. It's an estimate to guide your search, not a pre-approval.
Estimate only, not a pre-approval, mortgage commitment, or financial advice. Lenders weigh credit, employment, and other factors, and rules change. Confirm what you qualify for with a licensed mortgage professional.
How lenders decide what you can afford
Two ratios and one rule do most of the work:
GDS (Gross Debt Service), about 39%. Your housing costs (mortgage, property tax, heat, half of condo fees) shouldn't exceed ~39% of your gross income.
TDS (Total Debt Service), about 44%. All your debt payments together shouldn't exceed ~44%.
The stress test. You're qualified at the higher of your rate + 2% or 5.25%, so you can weather a rate increase. You still pay your real rate, but you borrow as if it were higher.
Qualifying for a price isn't the same as a home being worth it. An older furnace, roof, or panel can cost five figures after closing, money the bank doesn't count. Casaroo flags those before you offer.
Common questions
Why is my number lower than I expected?
The stress test is usually the reason, you qualify at a rate roughly 2% above the one you'll pay. It deliberately leaves room for rates to rise.
Does a bigger down payment help?
Yes, two ways: it adds directly to the price you can buy, and a down payment of 20%+ avoids CMHC insurance. Under 20%, insurance is required on homes priced at $1,500,000 or less. Above that, 20% down is mandatory and insurance is not available.
Is this a pre-approval?
No. It's an educational estimate to guide your search. A lender's pre-approval considers your credit, employment history, and full application.
Know your budget. Now spend it well.
Casaroo reads any listing's bones and appearance and flags the costly surprises, so the home you can afford is also one worth buying.