How Much House Can I Afford in Canada? GDS, TDS and the Stress Test
By Jordan Ellis · Published · Reviewed
Quick Answer
For an insured Canadian mortgage (under 20% down), housing costs can take up to 39% of gross income (GDS) and all debt payments up to 44% (TDS), both calculated at the stress-test rate: your contract rate plus 2%, or 5.25%, whichever is higher. On an $80,000 income with no other debts, that's $2,600/month for housing and roughly a $348,000 home with 10% down at a 4.5% contract rate.
The two ratios that decide your maximum
Canadian mortgage approvals revolve around two numbers:
- GDS (Gross Debt Service): housing costs (mortgage payment, property tax, heat, and 50% of condo fees) must stay under 39% of gross household income.
- TDS (Total Debt Service): housing costs plus all other debt payments (car loans, credit card minimums, student loans, lines of credit) must stay under 44%.
Those are the caps for insured mortgages, and most federally regulated lenders apply them to conventional mortgages as well. A credit score below 680 can tighten them to 35/42. You’ll still see the older 32% / 40% guideline quoted. Treat it as a comfort target rather than the ceiling. The full breakdown of what counts where is in our debt-to-income ratio guide.
Both ratios are calculated at the stress-test rate, not your actual rate.
The stress test changes everything
Federally regulated lenders must qualify you at the higher of 5.25% or your contract rate + 2%. Offered a 4.5% five-year fixed? Your ratios are computed at 6.5%. This typically shrinks your maximum purchase price by 15–20% compared to what the real payment suggests, which is why so many Canadians are surprised by their pre-approval number. The mortgage stress test explainer covers what’s exempt, and the stress test calculator runs your own numbers.
What the numbers look like at common incomes
Assuming a 4.5% contract rate (qualified at 6.5%), 25-year amortization, 10% down, $350/month property tax and $150/month heat, and no other debt:
| Gross household income | Max housing cost (39% GDS) | Max mortgage | Approx. home price |
|---|---|---|---|
| $60,000 | $1,950/mo | ~$216,000 | ~$241,000 |
| $80,000 | $2,600/mo | ~$313,000 | ~$348,000 |
| $100,000 | $3,250/mo | ~$411,000 | ~$456,000 |
| $150,000 | $4,875/mo | ~$653,000 | ~$726,000 |
Debt bites hardest at lower incomes. A $400 car payment and $200 in credit card minimums pull the $60,000 row down by about $58,000 of house and the $80,000 row by about $44,000, because the 44% TDS cap starts binding before the 39% GDS cap. Paying off debt before applying is often worth more than a bigger down payment. Every salary from $40k to $200k is worked out on our mortgage affordability by salary pages.
The costs the ratios ignore
- Land transfer tax: provincial (and municipal in Toronto and Montreal). Budget 1.5%–4% of the price depending on province, with first-time buyer rebates in Ontario, BC, and PEI. See our closing costs guide.
- CMHC insurance if you’re under 20% down. The premium is added to the mortgage itself, so the table’s prices come down a little once it’s included. Details in our CMHC guide.
- Maintenance: the standard 1%-of-home-value-per-year rule ($290/month on a $350,000 home).
- Utilities and everything else life throws at you.
How to find your real number
- Gross monthly income × 0.39, minus property tax and heat → the most you can put toward a mortgage payment.
- Gross monthly income × 0.44, minus property tax, heat and all other debt payments → the TDS version. Use the lower figure.
- In the mortgage calculator, set the rate to your offer +2% (or 5.25% if that’s higher) and find the mortgage whose payment fits under that figure.
- Sanity check against your actual take-home: approval math uses gross income, but your life runs on net. Our take-home pay pages show what each salary really keeps.
The bottom line
“How much house can I afford” in Canada is a three-layer answer: the 39/44 ratios, the stress test on top of them, and your own comfort zone below both. Many buyers deliberately aim for the older 32/40 numbers to leave room for rate increases and real life. Get pre-approved to learn the bank’s number, then decide your number deliberately, as our pre-approval guide explains.
Official sources
Rules and dollar limits change. Confirm current amounts with the official pages below before you act · Last reviewed .