Learn how mortgage affordability is calculated in Ontario using income, debt ratios, stress tests, and current interest rates — explained clearly for Ottawa homebuyers.

If you're planning to buy a home in Ottawa, one of the first questions you’ll ask is:

How much house can I afford?

Mortgage affordability in Ontario is not just about your income. Lenders evaluate several factors to determine your maximum purchase price.

Here’s how it works.

How Mortgage Affordability Is Calculated in Canada

When determining how much mortgage you qualify for, lenders look at:

1️⃣ Gross Income

Your annual income is the starting point. This includes salary, bonuses, commissions, or self-employment income.

2️⃣ Debt Service Ratios (TDS)

In Canada, lenders use the Total Debt Service (TDS) ratio, which typically cannot exceed 44%.

TDS includes:

• Mortgage payment

• Property taxes

• Heating costs

• Other monthly debts (car loans, credit cards, student loans)

If your total monthly obligations exceed 44% of your gross income, you may not qualify for that purchase price.

The Mortgage Stress Test

In Canada, borrowers must qualify at:

• Their contract rate + 2%

• Or the Bank of Canada qualifying rate

Whichever is higher.

This means even if your actual mortgage rate is 5%, you may need to qualify at 7%.

The stress test significantly impacts how much house you can afford in Ottawa and across Ontario.

Down Payment Requirements in Ontario

Minimum down payment rules:

• 5% on homes up to $500,000

• 10% on the portion between $500,000–$999,999

• 20% for homes over $1 million

A larger down payment reduces your mortgage amount and can improve affordability.

Property Taxes and Other Costs in Ottawa

When buying in Ottawa, remember:

• Property taxes are typically estimated at around 1% of the home value

• Condo fees (if applicable) are included in affordability calculations

• Home insurance and heating costs also factor into lender ratios

These additional expenses affect your maximum mortgage approval.

Example: Simple Affordability Breakdown

Let’s say:

• Household income: $150,000/year

• No other major debts

• 20% down payment

• 25-year amortization

• Current market interest rates

Based on the 44% TDS rule and stress test qualification, your maximum purchase price could be lower than expected once all variables are applied.

To get accurate numbers, use our AFFORDABILITY CALCULATOR to estimate your buying power instantly.

Why Online Calculators Matter

An affordability calculator helps you:

• Estimate your maximum home price

• See how interest rates impact your budget

• Understand how debt affects approval

• Adjust down payment scenarios

Start with our AFFORDABILITY CALCULATOR to get a realistic estimate before house hunting.

Final Thoughts

If you're buying in Ottawa or anywhere in Ontario, understanding mortgage affordability before shopping saves time and prevents disappointment.

You can calculate your numbers using our AFFORDABILITY CALCULATOR or CONNECT WITH A LICENSED MORTGAGE AGENT NOW for personalized advice and a fast pre-approval.

Knowing your true budget puts you in control — especially in competitive markets like Ottawa.

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