Buying a home is one of the most significant financial and emotional decisions you’ll ever make. Whether you’re dreaming of a cozy condo in downtown Toronto or a family home in the quiet suburbs of Calgary, one of the first and most pressing questions that arise is: “How much mortgage can I get?” This question is not just about numbers. It’s about your future, your family and your financial well-being. Understanding how lenders calculate your borrowing power in Canada can help you plan wisely, avoid disappointment, and, ultimately, make your homeownership journey smoother and more achievable.
In this blog, we’ll explore the key factors that determine your mortgage eligibility, what lenders look for, how to improve your chances, and how an expert mortgage broker can help you save the best deal especially in an ever-changing housing market.
Why It’s So Important to Know How Much Mortgage You Can Get
Many hopeful buyers fall in love with a property, only to discover later that they can’t qualify for the mortgage required to purchase it. This isn’t just disheartening—it can also delay your plans and affect your confidence in the process.
if you know how much you can borrow will help you:
- Shop within your realistic price range
- Strengthen your chances of getting approved
- Reduce financial stress by avoiding over-borrowing
- Understand the total cost of homeownership, including monthly payments
It’s not just about getting a home—it’s about getting the right home for your lifestyle and budget.
What Do Canadian Lenders Look At?
Lenders don’t just hand out mortgages based on what you want. They assess several financial indicators to determine what you can safely borrow.
Here are the most important factors they consider:
1. Your Income
Income is the foundation of your mortgage approval. Lenders always look at your gross annual income (before taxes), including:
- Employment income
- Bonuses and commissions
- Rental income
- Self-employment income (with documentation)
For couples, joint income is taken into consideration. The higher and more stable your income, the more mortgage you’re likely to qualify for.
2. Debt-to-Income Ratios (GDS & TDS)
Canada uses two key formulas to determine affordability:
- Gross Debt Service Ratio (GDS): Should be below 39%
- This includes your mortgage payment, property taxes, heating costs, and 50% of condo fees (if applicable) compared to your income.
- Total Debt Service Ratio (TDS): Should be below 44%
- This includes all debts—such as car loans, credit card payments, and lines of credit—as well as your GDS.
If your ratios are too high, you may get denied or only qualify for a smaller amount.
3. Your Credit Score
Your credit score reflects how reliably you pay back your debts. In Canada:
- A score of 680 or higher is considered good
- Between 600 and 679 may qualify, but with fewer options
- Below 600 is considered risky, and approval is more difficult
Higher credit scores unlock better interest rates and larger mortgage approvals.
Also read: Want to Know How To Fix a Bad Credit Score?
4. Your Down Payment
Your down payment affects how much home you can afford. In Canada, the minimum down payment is:
- 5% on homes under $500,000
- 10% on the portion between $500,000 and $999,999
- 20% for homes $1 million or more
A larger down payment reduces your mortgage size and monthly payments, which can help you qualify for more.
5. Your Employment Stability
Lenders prefer borrowers with stable, full-time employment. If you’ve been in your current job for less than three months or are self-employed, you may need to provide additional documents or proof of savings.
Mortgage Stress Test: Can You Afford Higher Rates?
Since 2018, all Canadian borrowers must pass a mortgage stress test, which ensures you can still afford your payments if interest rates rise.
You must qualify at the higher of:
- The current benchmark rate (around 5.25%–6%)
- Or your offered mortgage rate + 2%
For example, if your mortgage rate is 4.5%, you must prove you can afford payments at 6.5%. This lowers your borrowing power but protects you from future rate hikes.
How Much Mortgage Can You Qualify For in Canada?
Let’s break it down with a simple example.
Case Study: Sarah and Daniel – A Couple from Mississauga
- Combined gross income: $130,000/year
- Monthly debts (car + credit cards): $700
- Credit score: 725
- Down payment: $60,000
After applying their numbers to current GDS/TDS ratios and stress test requirements, they may qualify for a mortgage of approximately $550,000 to $600,000, depending on the lender. This would allow them to shop for a home in the $610,000–$660,000 range, assuming a 5–10% down payment.
Emotional Realities: It’s Not Just About Numbers
Mortgage qualification isn’t only a financial matter—it’s emotional, too.
Many Canadians feel a deep emotional connection to the idea of owning a home. It’s more than a roof over your head—it’s a symbol of:
- Security and stability
- A place to raise children
- A personal milestone
- A long-term investment
However, when the numbers don’t align with the dream, it can lead to frustration and disappointment. It’s okay to feel overwhelmed—you’re not alone. This is where a trusted mortgage broker can offer real peace of mind.
Why Work with a Mortgage Broker?
Unlike banks that offer only their products, mortgage brokers work with multiple lenders, including major banks, credit unions, and private lenders. That means they can:
- Help you understand how much you qualify for
- Shop for the best rates and terms
- Find lenders for unique situations (self-employed, new immigrants, bad credit)
- Guide you through pre-approval and closing
- Save you time, money, and stress
Brokers are invaluable if a bank has denied you or doesn’t fit the “perfect borrower” mold.
Tips to Increase Your Mortgage Qualification Amount
If you’re not satisfied with the amount you qualify for now, don’t worry. There are several ways to improve your mortgage eligibility:
1. Increase Your Down Payment: Even a slight increase in your down payment can lower your monthly payments and help you pass the stress test.
2. Pay Down Debts: Eliminating or reducing credit card balances, car loans, or student loans will lower your TDS ratio—and free up borrowing room.
3. Boost Your Credit Score: Pay bills on time, keep credit usage below 30%, and avoid applying for new credit too often. Even a 20-point increase can improve your approval chances.
4. Get a Co-Signer: A co-signer with substantial income and credit can increase your approval amount—make sure everyone understands the risks involved.
5. Work With a Mortgage Broker: They can help you restructure your application to maximize your approval and connect you with lenders that suit your needs.
First-Time Home Buyer Programs in Canada
If you’re a first-time buyer, you may be eligible for government incentives that improve your affordability, such as:
- First-Time Home Buyer Incentive (shared equity with CMHC)
- RRSP Home Buyers’ Plan (withdraw up to $60,000 tax-free)
- Land Transfer Tax Rebates (federal and provincial)
A mortgage broker can help you understand and apply for these programs.
Final Thoughts: Take the First Step With Confidence
Understanding how much mortgage you can get is the first step in turning your homeownership dream into reality. While the process can feel complex, emotional, or even discouraging at times, remember that you have options, support, and tools available. Whether you’re just starting or facing unique financial circumstances, a knowledgeable mortgage broker can help you navigate your journey with confidence, clarity, and care. Connect with our trusted mortgage broker today and receive personalized advice that prioritizes your goals. Don’t leave your dream home to guesswork—take control of your financial future with expert guidance.