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Qualifier to Calculate How Much Mortgage I Can Afford on My Salary

Canada Mortgage Qualification Calculator

The first steps in buying a house are ensuring you can afford to pay at least 5% of the purchase price of the home as a down payment and determining your budget. This calculator steps you through the process of finding out how much you can borrow. Fill in the entry fields and click on the payment schedule button to see a complete amortization schedule of your mortgage payments.

Canadian Home Mortgage Qualification Tips

Location and Affordability

If you are a first-time home buyer looking to take that first step on the housing ladder, real estate affordability differs massively across the country.

In regions like the Prairies (central western Canada) and the Atlantic provinces (eastern, coastal) getting on the property ladder is attainable for those earning a typical wage, especially if you are smart with saving and investing your cash.

The cheapest province is New Brunswick, where property can be purchased with a typical price of $283,700. This is followed by the easterly Newfoundland and Labrador, at $288,000 (Source).

In Central Canada and British Columbia (west coast) it’s not so easy, especially around the population centres of Toronto and Vancouver, and to a lesser extent Montreal.

If you want to buy in Toronto and Vancouver you’re going to need either above-average income or a strong deposit, as prices in those cities typically top $1 million. In many ways major Canadian cities have been a victim of their own success in recent years, as the global pull of the markets has pushed house prices up due to strong competition for housing stock.

One positive of Canada compared to other nations is there are mortgages available with a deposit of just 5%. Therefore, if you have a high paying job all markets are accessible, even with a relatively small deposit.

If you don’t earn high income and want to buy in one of Canada’s more expensive markets the best thing you can do is save a portion of your pay packet month after month. Bigger deposits mean you’ll have access to cheaper mortgages and your loan amount would be smaller.

If you can’t afford to buy in your chosen market just yet it’s not a bad time to save, as interest rates have improved versus just a few years ago. During the pandemic Canada’s policy interest rate stood at just 0.25% before rising to 5% in July 2023, which means you can benefit from higher savings rates for any money you do manage to set aside with a view to buying property in the future.

Loan Opportunities

Although the population of Canada is not much larger than the entire city of Tokyo, almost a quarter million people immigrate and want to buy homes each year. When you add that to the native demand from people that grow up locally and would like to buy, you end up with a pretty competitive market.

The focus of the Canadian government in the loan market is to ensure that Canadian citizens are ready to buy a home and know that it will fit their long term lifestyle.

Most loans that are chosen are fixed in nature. While mortgages with a 5% deposit are available, the standard loan is a down payment of 20% with a 25 year payback period. If you don't go with a fixed loan, you can also choose from 5 year adjustable rate mortgages that give you a low rate for five years before a higher rate is locked in. One piece of advice that most mortgage brokers will provide you with is that if you do get an adjustable rate mortgage, you should always shop the current interest rate before you let it lock in at a higher fixed rate, because you might find that refinancing at a long term fixed rate ends up being cheaper than what you are locked into. Whatever you decide, it’s likely you need to regularly refinance to keep your rate low. Mortgage rates vary significantly depending on where the government’s policy interest rate stands, so it’s good to keep a regular eye on the markets before plotting your next move.

Pros & Cons of Fixed and Adjustable Rates

Fixed rate

Fixed rate financing is ideal when you plan to stay in your home for an extended period of time. While they can initially be more costly than adjustable rates, they protect you if mortgage rates go up by locking you into the same rate for a set period of time - commonly five years. In the 1980s in Canada some people were left high and dry when interest rates on some loans went up to around 16 to 18% - a rate you’d expect with a credit card - so fixed rates would protect you in those circumstances.

Buyers who took out a fixed rate a few years ago have benefitted compared to those with adjustable rates. Canada’s policy interest rate set by the Bank of Canada climbed from 0.25% at the start of 2022 to 5.0%, where it has stood since June 2023. This has correspondingly caused mortgage rates to increase rapidly. Canadian mortgage rates are roughly double 2022 levels, though they are still nowhere near as high as extremes seen in the 1980s.

Adjustable rate

Adjustable rates can give you a lower upfront cost than a fixed rate, which can be advantageous depending on your circumstances. For example, if you need to remodel your home after purchasing a project, you’ll have more money spare than with a fixed rate.

Adjustable rates go up or down depending on how the central bank’s policy interest rate moves, so it can be something of a gamble whether they pay off.

The good news for applicants is that in the current climate it’s unlikely the Bank of Canada would raise the policy interest rate far higher than a level of around 5.0%, for fear of causing mortgage holders to default on their payments. If anything, it seems likely that interest rates will start to come down again in the next few years.

Mortgage refinance penalty

Whether you favour the fixed or adjustable model, in both cases you need to read the small print when taking out the loan to figure out when you’re liable to pay a penalty to refinance.

In many cases there’s a penalty within the first three to five years if you refinance, so that’s something you need to take into account when determining whether it makes sense to commit for such a long period.

Government Incentives

Tax Credit

The Canadian government has some major incentives for first-time home buyers. The first incentive is a tax credit for home buyers, enabling you to claim back up to $10,000. It doesn't take that much to qualify and your real estate agent can normally ensure that you are qualified before you go out and start putting bids on homes. Depending upon how much you qualify for, it can impact the amount of the loan you may need to purchase a property. There is also a program which provides tax credits to disabled people.

Land Transfer Tax rebate

The Land Transfer Tax, a tax paid when buying a home, is subject to incentives depending on the province. In Ontario the tax is returned as a rebate for first-time buyers on the first $368,000 of the cost of their homes. This amounts to a saving of up to $4,000, while if they’re buying in Toronto they benefit from another reduction of $4,475. There are similar tax rebates in British Columbia, at $8,000, and Prince Edward Island, at $2,000 (source).

First Home Savings Account

Savers who want to buy in a few years’ time can also utilise the country’s First Home Savings Account (FHSA). The account is available to Canadian residents who have never owned property, and it enables savers to contribute $8,000 per tax year to the account up to a total of $40,000 – which they can eventually use to buy property. A big incentive of the FHSA is savers can deduct their contributions from their income when filing their taxes every year, so you’ll pay tax on less money than you earnt. Money in the FHSA can be invested in a number of ways, for example in mutual funds, savings bonds, and shares – so it's a great tool for savers.

The Home Buyers’ Plan

This scheme enables people to borrow $35,000 from their Registered Retirement Savings Plan (RRSP) tax free to use as a downpayment on their first home, while couples can withdraw up to $70,000 between them. You have to repay the money within 15 years, or you’ll be forced to pay taxes on the money. To be eligible you can’t have lived in a home you’ve owned within the past five years. You need a written agreement to buy or build a home to use the scheme.


Governments tend to hand first-time buyers incentives as a way of promoting their country as an aspirational place to live and raise a family - especially as policies and schemes helping people on the ladder can help them win elections.

Who can help you in the mortgage market?

There are many lenders in Canada serving the mortgage market: banks and other large financial institutions. Mortgage brokers can help you navigate the best deals, as most have access to a broad range of local & nationwide lenders. You can also go to banks directly, like ScotiaBank and TD Canada Trust, however in that case you are only given access to their deals, rather than mortgages across the market. In practice most buyers end up pre-qualifying with a bank or a realty institution through their real estate agent or mortgage broker. Even if you end up using a bank for the first time, as long as the loan is backed and it meets your terms you should feel confident in signing it.

An alternative to mainstream lenders are ‘private lenders’, who offer short-term mortgages at a higher rate than the big banks. While they can be a solid solution for some people turned away from the mainstream market, whether that’s due to impaired credit or irregular income, you should proceed with caution, as their loans aren’t stress tested to the same high standards. It’s crucial to seek the advice of an expert before taking out such a mortgage.

What Happens If You Default?

When taking out a mortgage there’s always the risk of falling into arrears, meaning you fall behind on your payments. If you lag behind for an extended period of time the worst case scenario is your lender repossesses and sells your property.

Thankfully this is not the norm, as in the Canadian market banks are generally careful to make sure you’re a safe bet - it’s not in their interests for you to default on your loan. Indeed, there’s a reason levels of arrears in Canada are at their lowest level in decades (source), as lenders apply a stress test when you apply for a mortgage in a bid to make sure you can afford to keep paying even if interest rates rise.

That’s not to say there’s no risk at all however, as Canadian mortgage holders have seen their mortgage costs rise since 2022, especially if they have a variable or adjustable rate mortgage.

To give you peace of mind, it’s good to have some cash left over in case the cost of your loan rises or your income falls. You can also guard against losing your job by taking out insurance that protects your income, like employment insurance.

The Hottest Markets


Vancouver is one of the most beautiful cities in North America. Its continued development as a major hub on the Pacific rim causes it to be a magnet for investment from Asian countries. Originally, it was thought that Hong Kong Chinese would settle there and there would be little else going on from Asia. Instead, the growth that the city experienced attracted others from many different countries, keeping the real estate market strong and competitive. Vancouver has an extremely mild climate for Canada, making it attractive to those unwilling to deal with harsher winters you get in the likes of Alberta. Vancouver’s geography is both its strength and its weakness however, as the beauty of the ocean and the mountains makes it hard for the city to expand and accommodate new residents.


Toronto of course is another perennial market champion in most of its downtown areas. Most businesses that are national keep some form of office here because the infrastructure provides so many advantages. Outside of business, the city is the most populous and culturally rich city in Canada, pulling in immigrants from across the world who are attracted to its arts and sports scenes.

Unlike Vancouver there’s plenty of buildable land, so the Greater Toronto Area has expanded outwards, accommodating surrounding cities like Mississauga, Brampton, Markham and Oshawa. This means there’s still plenty of opportunities for people to move and develop new housing stock in the region.

Housing Bubbles

The term ‘housing bubble’ has been widely bandied about since the US housing bubble burst during the global financial crisis. A bubble effectively means house prices are overvalued, resulting in house prices falling down the line.

In Toronto and Vancouver the prospect of their being a ‘bubble’ has seemed very real owing to the post-pandemic surge in house price growth and transactions, as pent up demand and low interest rates fuelled strong demand for property.

It’s likely this prospect of the ‘bubble bursting’ is receding in these cities however, as higher mortgage rates, combined with measures like a ban on foreign buyers in Toronto, has helped curb demand. Toronto was flagged by the UBS Global Real Estate Bubble Index as being in a housing bubble in 2022, but thankfully the same report said the danger was receding in 2023.

While house prices may seem high in Toronto and Vancouver, the fact is they’re sustained by demand from existing Canadians as well as new immigrants, so their markets are globalised and that’s unlikely to change any time soon.

Dealing with House Price Falls

In the long run house prices tend to increase in countries with stable economies, like Canada. However in the unlikely event that house prices fall, you’re more protected if you use a larger down payment.

If you only use a small down payment of 5%, if house prices fall there’s a danger that the loan could be worth more than your home value, in what’s known as falling into ‘negative equity’. This can lead to problems where it’s hard to refinance, meaning you can end up with no choice but to pay a higher mortgage rate or ultimately sell your property.

If you are unsure about the state of the market or your level of risk, check out Garth Turner's Greater Fool blog, which details some of the recent astronomical home price rises seen in parts of Vancouver & Toronto, along with the justifications people make while over-extending themselves.

Qualifying for a home in Canada can be an exciting process. Your agent and mortgage broker can pre-qualify and help you find the home of your dreams.

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About The Author


Ryan Bembridge has edited three property magazines – Mortgage Introducer, Property Investor Post, and PropertyWire. He is a regular contributor to ProperPR, where he interprets raw data and turns them into press release, while he has written for audiences in Canada, the UK and the US.

His main interest comes from the politics of housing, given that affordability struggles and building enough homes represent some of the major challenges of our times.