How Much Can You Afford?
Not sure? If insured through CMHC, you can work out the mortgage loan that you can afford, with just a few simple calculations. If you don't know how much your monthly mortgage payment might be, you can use our mortgage calculator to determine the likely monthly payments (principal + interest) associated with different house prices at different interest rates.
The following calculations will help you determine how much you can afford. Your mortgage lender or mortgage broker will make these and other calculations when evaluating your unique situation. Ask them about being pre-approved for a CMHC-insured mortgage to avoid any surprises. You can also do the following exercises to find out where you stand.
Calculating Gross Debt Service (GDS)
This is a way of estimating the maximum home-related expenses you can afford to pay each month. To qualify for CMHC insurance, the total should not exceed 32% of your gross monthly household income.
Calculating Total Debt Service (TDS)
This enables you to estimate the maximum debt load you can carry each month. It should not exceed 40% of your gross monthly household income.