This mortgage qualification calculator will help you estimate how much home you can afford in Canada based on your income and expenses. Find out your mortgage pre-approval estimate.
Mortgage qualification in Canada is the process that lenders follow to determine how much mortgage a borrower can afford. This comes down to assessing the risk involved with the borrowers ability to repay.
Mortgage qualification factors
One of the first qualification factors that lenders assess is income and employement stability. When it comes to income lenders look at factors such as salary, commissions, overtime, investment income and employement status like self-employed vs. employee. Often times they require proof of income which includes T4’s, pay stubs and notice of assessments (NOA’s) as well as financial statements for self-employed individuals.
Debt service ratios
The two main debt service ratios that lenders use to assess your mortgage qualification are the Gross Debt Service (GDS) ratio and the Total Debt Service (TDS) ratio. If you want to see how your income and debt impact these key ratios, you can use this debt service ratio calculator.
Mortgage stress test
If you are acquiring a mortgage from a federally regulated lender you will need to pass the mortgage stress test. This involved testing your mortgage payment against debt service ratios at the higher of 5.25% or the contract mortgage rate pluse 2.00%. You can see how the mortgage stress test impacts your home affordability by using a mortgage stress test calculator.