One of the first questions homebuyers ask is:
“How much house can I afford?”
The answer depends on several key factors lenders look at when approving mortgages.
Income
Your household income is the starting point.
Lenders typically look at gross income (before taxes) to determine how large a mortgage payment your budget can support.
Debt
Existing debt also plays an important role.
This includes:
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Car loans
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Credit cards
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Student loans
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Lines of credit
Higher debt levels can reduce how much mortgage you qualify for.
The Mortgage Stress Test
In Canada, most borrowers must pass the mortgage stress test.
This rule ensures borrowers can afford payments if rates increase in the future.
It’s one of the safeguards designed to keep the housing system stable.
Down Payment
Your down payment also affects affordability.
Minimum down payments in Canada typically follow this structure:
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5% on the first $500,000
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10% on the portion between $500,000–$1,499,999
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20% for homes over $1.5 million
A larger down payment can reduce monthly payments and mortgage insurance costs.
Why Pre-Approval Matters
Getting a mortgage pre-approval is one of the smartest steps before house hunting.
Our team reviews your finances and compares lenders to determine:
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Your realistic price range
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Mortgage options
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Potential payment scenarios
This helps buyers search confidently knowing their financing is already planned.
Final Thoughts
Mortgage affordability involves several moving parts, but understanding them early makes the homebuying process much smoother.
If you’re thinking about purchasing a home this year, we’d be happy to help you calculate your buying power and walk you through the next steps.