With $120,000 of income and $60,000 saved, the default settings put your price ceiling near $533,556. The monthly payment tops out at $3,416.67, which supports a mortgage near $488,000. Put in your own income, debts and savings below.
How does the calculator set the limit?
Lenders don’t look at income alone. They use two ratios. The first counts housing costs only: the mortgage payment, property tax, heat and half of any condo fees. The second adds your other debts on top.
Here’s how it works. The calculator caps the first at 39% of gross monthly income and the second at 44%, then goes with whichever gives the smaller payment. It sizes the loan at the stress test rate, the higher of your rate plus 2% and 5.25%, over 25 years.
Which matters more, your deposit or your debts?
Deposit, debts and income all move the answer, and you can’t fix all three overnight. The table shows how far the first two push the price away from the default case.
| Change | Maximum price | Limit that applies |
|---|---|---|
| Default: $60,000 down, $500 of debts | $533,556 | Housing costs, 39% |
| Down payment raised to $100,000 | $574,938 | Housing costs, 39% |
| Monthly debts raised to $1,500 | $395,931 | Total debt, 44% |
How much house does $120,000 a year buy?
Start with the defaults: $120,000 of income, a rate of 4.99%, property tax of $4,000 a year and $150 a month for heat. Monthly income is $10,000, and 39% of that is $3,900. Tax and heat take $483.33, which leaves $3,416.67 for the mortgage payment.
The qualifying rate is 6.99%, so that payment supports a loan of about $488,236. Add your $60,000 deposit and the maximum price is $533,556. The calculator also checks that your deposit meets the minimum for that price, and that any insurance premium fits inside the limit. If either check fails, you’ll see it.
Now say you’ve got $1,500 a month in car and card payments on top. The debt ratio becomes the tighter limit, the payment falls to $2,416.67 and the price drops to $395,931. That’s more than $137,000 gone. Ouch.
Clearing debt before you apply can matter as much as a bigger deposit. Run the numbers both ways before you decide where your savings go.
What does the estimate leave out?
Plenty of buyers look at the mortgage payment and forget everything else. Property tax, heat and condo fees all count against your ratio, and lenders also set their own limits, check your credit and may use other rules of their own, so treat this as a first estimate and not as an approval, since it isn’t one.
If your deposit is what holds you back, the tool says so. A larger one raises the price you can reach. The result assumes 25 years, and longer terms on insured mortgages are restricted.
Want to see the payment at a higher rate? Use the mortgage stress test calculator, then confirm the minimum cash with the down payment calculator. The mortgage payment calculator gives the exact payment on the price you pick. Income drives everything here, and the income tax calculator shows what you keep after tax.
Where do the rules come from?
The stress test rule and the down payment tiers come from federal sources, including the Financial Consumer Agency of Canada. The 39% and 44% ratios are the values we use inside this calculator. Your lender may apply different ones. This website has no connection with any lender or government body.
Frequently asked questions
How much home can I afford on $120,000 a year?
With $60,000 down, $500 of monthly debts and a 4.99% rate, the calculator shows about $533,556.
Which ratios does the calculator use?
Housing costs can take 39% of gross income and total debt 44%. Whichever gives the smaller payment sets your limit.
What is the qualifying rate?
The higher of your mortgage rate plus 2% and 5.25%. At 4.99% that works out to 6.99%.
Do other debts change the answer?
They do. Adding $1,500 of monthly debts cuts the maximum price from $533,556 to $395,931 in the default case.
Does a bigger down payment help?
Yes. Raise the deposit from $60,000 to $100,000 and the maximum price climbs to $574,938.
Sources and updates
Updated: . How we check rates · Editorial team · Updates
Estimate only. These figures are a planning estimate, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns, and we don't offer tax, legal or accounting services. We have no connection with the Canada Revenue Agency, Revenu Québec or any provincial government. Your real amounts depend on details this tool cannot see, so confirm them with an official source or a qualified professional before you act.