How Much Mortgage Can I Afford on a $120k Salary in Canada?

Quick Answer

On a $120,000 salary in Canada, the federal mortgage stress test qualifies you for roughly a $563,996 home with 10% down — a $507,596 mortgage with payments around $2,809/month at a 4.5% contract rate. Carrying $500/month of other debt drops that ceiling to about $563,996.

Maximum home price on $120,000/year

$563,996

Mortgage

$507,596

Down payment (10%)

$56,400

Payment at 4.5%

$2,809/mo

The math on a $120,000 salary

Gross monthly income is $10,000. Federally regulated lenders must qualify you at the higher of your contract rate + 2% or 5.25% — so 4.5% contracts are tested at 6.5% — under two ratio caps:

GDS (39%): $3,900/month covers the mortgage payment, property tax, heat, and half of condo fees. After our $500 tax-and-heat allowance, $3,400/month is left for the mortgage payment.
TDS (44%): $4,400/month covers all of that plus other debts. With no other debts, GDS binds first.

That payment capacity converts to a $507,596 mortgage at the stress rate with a 25-year amortization and Canadian semi-annual compounding — plus 10% down, a $563,996 home.

What other debt does to a $120k income

Add $500/month of car payments, credit card minimums, or student loans and the TDS cap takes over: your ceiling falls from $563,996 to $563,996 — a $0 loss of buying power for a $500/month obligation. Clearing debt before applying beats a slightly bigger down payment almost every time.

Assumptions behind these numbers

Contract rate 4.5%, qualified at 6.5% (contract + 2%), 25-year amortization
10% down payment; CMHC insurance premium (added to the mortgage with under 20% down) trims the real-world figure a few percent
$350/month property tax and $150/month heat; no condo fees or other debts
Your actual number depends on credit score, lender, and the property — run yours in the mortgage stress test calculator

Mortgage calculator — payments and amortization for any price
Land transfer tax calculator — the closing cost buyers forget
Income tax calculator — what $120,000 actually takes home by province
How much house can I afford? — the full GDS/TDS guide

Other salary points:

Frequently Asked Questions

How much house can I afford making $120,000 a year?

With no other debts and 10% down, roughly $563,996 — that's $507,596 of mortgage plus a $56,400 down payment, qualified at the 6.5% stress-test rate. Lenders cap housing costs at 39% of gross income (GDS) and total debt payments at 44% (TDS).

What would the monthly payment be on a $120k salary?

The maximum stress-tested mortgage of $507,596 carries a payment of about $2,809/month at your actual contract rate of 4.5% — the 6.5% qualifying rate only limits approval, not what you pay. Add ~$500 for property tax and heat.

How do car payments or credit cards change this?

Carrying $500/month of other debt drops the ceiling from $563,996 to about $563,996 — the 44% TDS cap binds before the 39% GDS cap once you have meaningful debt payments. Paying off debt before applying is often worth more than a bigger down payment.

Does this include CMHC insurance?

Not exactly — with 10% down your mortgage is insured and the CMHC premium (3.10% of the loan at 10% down) is added to the balance, which trims the maximum price by a few percent. The stress-test rules and ratios shown here are the same ones lenders apply; your exact figure comes from a real pre-approval.

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