How much mortgage can I afford?

Use calculator links to find out how much you can afford.

What is the minimum down payment required for a mortgage?

The minimum down payment is based on the purchase price of your home.
If the purchase price is $500000 and less, only %5 down payment is required. If the purchase price is between $500,000- $999,999 you will need %5 of $500,000 and 10% for the portion of the purchase price above $500,000.

What is mortgage insurance (default insurance) and how does it work?

If you want to buy a home with a down payment of less than 20%, you’ll need mortgage loan insurance, this protects your lender in case you can’t make your payments.
CMHC mortgage loan insurance lets you get a mortgage for up to 95% of the purchase price of a home.
It also ensures you get a reasonable interest rate, even with your smaller down payment.

How much does mortgage loan insurance (default insurance) costs?

Mortgage default insurance costs homebuyers 2.8% to 4.0% of their mortgage amount. Let’s say you put down %5 down payment mortgage insurance will cost 4% and will be added to your mortgage amount.
For more information, click here.

What is the benchmark rate?

Canada’s benchmark rate is a rate that lenders are required to use to qualify mortgage borrowers in Canada. Those borrowers want a variable rate mortgage or a mortgage term of fewer than 5 years. As it stands, any buyer whose down payment on a home is one-fifth of the purchase price or more has to show they can afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or the five-year benchmark rate published by the Bank of Canada, which sits at 5.25 percent — whichever is higher.

What is a variable mortgage?

With a variable interest rate mortgage, the interest rate can change during the term. The interest rates on variable-rate mortgages are often lower than on fixed interest rate mortgages with the same term length, so variable interest rate mortgages may be attractive and save you interest in the long term. But it’s very difficult to predict which will be the lower-cost option over the term of the mortgage.

What is a fixed mortgage?

With a fixed interest rate mortgage, you agree to a certain “fixed” rate of interest in the mortgage contract. This interest rate is set for the entire term, and the amount of your payments is also fixed. Because the interest rate does not change, you know how much interest you will have to pay and how much of the original loan amount will be paid off during the term. A fixed-term gives you security and a predictable budget.

How is the mortgage debt service ratio calculated?

Mortgage professionals use 2 main ratios to decide if borrowers can afford to buy a home:
Gross Debt Service (GDS) and Total Debt Service (TDS). This calculator will give you both.
GDS is the percentage of your monthly household income that covers your housing costs. It must not exceed 35%.TDS is the percentage of your monthly household income that covers your housing costs and any other debts. It must not exceed 42%.

What is a bona fide sales clause?

Bona-fide Sales Clause means you can’t pay off your mortgage during the term unless you sell your property. Another could be a No Port Option, meaning you can’t take the mortgage with you to a different property if you sell during your term.