Mortgage Affordability Calculator 2021
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Stress Test Rate Dropping to 4.79%
August 12th, 2020
The stress test rate has fallen by 15 basis points to 4.79%, 40 basis points lower than early 2020 and only 15 basis points above the record-low of 4.64%.
This comes as National Bank followed the rest of the Big 5 in cutting their posted 5-year fixed rate to 4.79% from 4.94%. BMO and CIBC lowered their rates over the weekend and TD and RBC lowered their rates last week.
As of August 12th, 2020, this has been confirmed by the Bank of Canada. Our calculator has been updated to reflect these new changes.
Your Income
Your Partner’s Income
Gross Income: $00
Estimated Net Income: $00
Condo Apt.
Townhouse
Detached House
Not DecidedSome examples include: Credit Card, Student Loan, Car Payment, etc.
Food & Groceries
Car & Transport
Bills (e.g. Phone, TV)
Other Expenses
Property Tax
Heating Fees
Condo Fees
Enter your average monthly housing expenses in each of the above categories includes property tax, heating fees and condo fees.
How is my affordability calculated?
Here’s a breakdown of each factor impacting your home affordability and the limit it places on your asking price. Your affordability is the minimum of all the values shown.
| Limiting Factor | Purchase Price Limit | |
|---|---|---|
| Minimum Down Payment | $ | 850,000850k |
| TDS Ratio | $ | 00 |
| GDS Ratio | $ | 00 |
| Total Expenses | $ | 1,266,0001.27m |
- Your down payment directly imposes a limit on your maximum asking price.
- Under CMHC regulations, your total debt service (TDS) ratio cannot exceed 42%. The TDS ratio is calculated by dividing your total annual housing-related and debt expenses by your gross annual income. These expenses include:
- Your mortgage payment (both principal and interest)
- Your property tax
- Your heating costs
- Half of your condo fees (if applicable)
- All forms of debt payments
- Under CMHC regulations, your gross debt service (GDS) ratio cannot exceed 35%. The GDS ratio is calculated by dividing your annual housing-related expenses by your gross annual income. These expenses include:
- Your mortgage payment (both principal and interest)
- Your property tax
- Your heating costs
- Half of your condo fees (if applicable)
- Your total monthly expenses cannot exceed your net (after-tax) monthly income.
Stress Testing
Affordability calculators need to take into account government stress testing regulations published by the Office of the Superintendent of Financial Institutions (OSFI). You must still be able to afford your mortgage payments if your interest rate increases to the greater of
- the Bank of Canada five-year benchmark rate, currently set to 4.79%, and
- your current or target interest rate, plus 2% if uninsured. See our stress-test calculator for more details.
Mortgage Information
Want to take a closer look at your potential mortgage payments? Use our Mortgage Calculatorto estimate your future payments, find out how different interest rates affect you, and how much you'll pay over the course of your mortgage.
Recent Changes to the Mortgage Stress Test
The CMHC has announced that on July 1st, 2020, they will be changing their guidelines for determining mortgage affordability. These changes include:
- Qualifying credit scores for mortgage insurance (for mortgages with less than 20% downpayment) will increase to 680 from 600.
- Gross Debt Service (GDS) and Total Debt Service (TDS) ratio limits will decrease to 35% (from 39%) and 42% (from 44%) respectively.
- Non-traditional source of down payment funding, such as a personal unsecured line of credit, will no longer count as equity for insurance purposes.
RBC Royal Bank Mortgage Affordability
Before you get a mortgage from RBC, it is important to know how RBC calculates your mortgage affordability. RBC takes into account the following factors:
- Your household income
- Your downpayment
- Your monthly debt payments to loans and lines of credit including credit cards, car loans, student loans, and leases.
If your downpayment is less than 20%, RBC's mortgage affordability calculator also considers your mortgage insurance premiums. Unlike some other mortgage affordability calculators, RBC's mortgage affordability calculator does not take into account your location for property taxes and utility costs.
RBC calculates your mortgage limit using the current qualification rate and a maximum gross debt service (GDS) ratio of 32% and a maximum total debt service (TDS) ratio of 40%. These ratios are more strict than CMHC regulations, but you may still be able to get a mortgage with RBC even if you exceed these limits.
Another factor in determining your mortgage affordability is your downpayment. According to RBC, home buyers must have a minimum 5% downpayment for homes worth less than $500K. For homes between $500K and $1M, home buyers must at least 5% for the first $500K and 10% for the remaining amount. For homes worth more than $1M, home buyers must have a minimum 20% downpayment.
The above content is based on on our analysis of RBC's tools and software, and should be used for informational purposes only. WOWA.ca does not represent RBC and cannot guarantee the accuracy of the content. For the most up-to-date and accurate information, please consult with a mortgage broker or your local RBC branch advisor or mortgage specialist. Official calculator available on RBC's website.
Scotiabank Mortgage Affordability
Before you get a mortgage from Scotiabank, it is important to know how Scotiabank calculates your mortgage affordability. Scotiabank takes into account the following factors:
- Your household income
- Your property taxes
- Any applicable condo fees or heating costs
- Your monthly debt payments to loans and lines of credit including credit cards, car loans, student loans, and leases.
Scotiabank's mortgage affordability calculator does not take into account your downpayment. Instead, it finds your maximum mortgage limit and calculates your minimum downpayment for a home with that amount of mortgage.
Scotiabank calculates your mortgage limit using the current qualification rate and a maximum gross debt service (GDS) ratio of 35% and a maximum total debt service (TDS) ratio of 42%. This means that your mortgage payment, property tax, heating costs, and half of your condo fees (if applicable) cannot take up more than 35% of your gross income. In addition, this amount plus your total debt payments cannot take up more than 42% of your gross income.
Another factor in determining your mortgage affordability is your downpayment. According to Scotiabank, home buyers must have a minimum 5% downpayment for homes worth less than $500K. For homes between $500K and $1M, home buyers must at least 5% for the first $500K and 10% for the remaining amount. For homes worth more than $1M, home buyers must have a minimum 20% downpayment.
The above content is based on on our analysis of Scotiabank's tools and software, and should be used for informational purposes only. WOWA.ca does not represent Scotiabank and cannot guarantee the accuracy of the content. For the most up-to-date and accurate information, please consult with a mortgage broker or your local Scotiabank branch advisor or mortgage specialist. Official calculator available on Scotiabank's website.
TD Bank Mortgage Affordability
Before you get a mortgage from TD Bank, it is important to know how TD calculates your mortgage affordability.TD takes into account the following factors:
- The location of your future home
- Whether your future home is a detached home or condo
- Your household income
- Your downpayment
- Your monthly bills and expenses including groceries, transportation, shopping, and insurance.
- Your monthly debt payments to loans and lines of credit including credit cards, car loans, student loans, and leases.
Your location and property type are used to provide estimates for your potential property taxes, utilities, and condo fees.
TD calculates your mortgage limit using the current qualification rate and a maximum gross debt service (GDS) ratio of 35% and a maximum total debt service (TDS) ratio of 42%. This means that your mortgage payment, property tax, heating costs, and half of your condo fees (if applicable) cannot take up more than 35% of your gross income. In addition, this amount plus your total debt payments cannot take up more than 42% of your gross income.
Another factor in determining your mortgage affordability is your downpayment. According to TD, home buyers must have a minimum 5% downpayment for homes worth less than $500K. For homes between $500K and $1M, home buyers must at least 5% for the first $500K and 10% for the remaining amount. For homes worth more than $1M, home buyers must have a minimum 20% downpayment.
The above content is based on on our analysis of TD's tools and software, and should be used for informational purposes only. WOWA.ca does not represent TD and cannot guarantee the accuracy of the content. For the most up-to-date and accurate information, please consult with a mortgage broker or your local TD branch advisor or mortgage specialist. Official calculator available on TD's website..
BMO Bank of Montreal Mortgage Affordability
Before you get a mortgage from BMO, it is important to know how BMO calculates your mortgage affordability. BMO takes into account the following factors:
- Your household income
- Your property taxes
- Your heating costs
- Any applicable condo fees or maintenance costs
- Your monthly debt payments to loans and lines of credit including credit cards, car loans, student loans, and leases.
BMO includes the cost of mortgage insurance in your mortgage affordability calculation. This allows you to borrow more (up to 95% of your future home's value) with a smaller downpayment.
BMO calculates your mortgage limit using the current qualification rate and a maximum gross debt service (GDS) ratio of 35% and a maximum total debt service (TDS) ratio of 42%. This means that your mortgage payment, property tax, heating costs, and half of your condo fees (if applicable) cannot take up more than 35% of your gross income. In addition, this amount plus your total debt payments cannot take up more than 42% of your gross income.
Another factor in determining your mortgage affordability is your downpayment. According to BMO, home buyers must have a minimum 5% downpayment for homes worth less than $500K. For homes between $500K and $1M, home buyers must at least 5% for the first $500K and 10% for the remaining amount. For homes worth more than $1M, home buyers must have a minimum 20% downpayment.
The above content is based on on our analysis of BMO's tools and software, and should be used for informational purposes only. WOWA.ca does not represent BMO and cannot guarantee the accuracy of the content. For the most up-to-date and accurate information, please consult with a mortgage broker or your local BMO branch advisor or mortgage specialist. Official calculator available on BMO's website.
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CIBC Mortgage Affordability
Before you get a mortgage from CIBC, it is important to know how BMO calculates your mortgage affordability. CIBC takes into account the following factors:
- Your household income
- Your downpayment
- Your property taxes
- Your heating costs
- Any applicable condo fees
- Your monthly debt payments to loans and lines of credit including credit cards, car loans, student loans, and leases.
CIBC includes the cost of mortgage insurance in your mortgage affordability calculation. This allows you to borrow more (up to 95% of your future home's value) with a smaller downpayment.
Another factor in determining your mortgage affordability is your downpayment. According to CIBC, home buyers must have a minimum 5% downpayment for homes worth less than $500K. For homes between $500K and $1M, home buyers must at least 5% for the first $500K and 10% for the remaining amount. For homes worth more than $1M, home buyers must have a minimum 20% downpayment.
The above content is based on on our analysis of CIBC's tools and software, and should be used for informational purposes only. WOWA.ca does not represent CIBC and cannot guarantee the accuracy of the content. For the most up-to-date and accurate information, please consult with a mortgage broker or your local CIBC branch advisor or mortgage specialist. Official calculator available on CIBC's website..
Mortgage Downpayment and Affordability
Your mortgage downpayment can impact your mortgage affordability. A larger downpayment can reduce your mortgage borrowing, lowering your interest costs and CMHC mortgage insurance premiums. A smaller downpayment could lead to higher interest costs, more expensive mortgage insurance and potentially even disqualify you from an insured mortgage if your debt servicing ratios are too high.
Recent changes to CMHC regulations has made it harder to get an insured mortgage, making your downpayment even more important. With a downpayment of 20% or more, you can have a conventional mortgage without mortgage insurance and skip both the fees and requirements of CMHC mortgage insurance.
CMHC Insurance
An insured mortgage lets you buy a home with a downpayment of less than 20%, giving you more options and flexibility in choosing the right home. In addition, lenders usually offer the lowest mortgage rates to insured mortgages as their risk is covered by your mortgage insurance.
The Canadian Mortgage and Housing Corporation (CMHC) is a crown corporation that insures most mortgages in Canada. They charge an upfront fee or premium for mortgage insurance based on the amount of downpayment you have or the loan-to-value (LTV) of the mortgage. They offer insurance for mortgages with an LTV of up to 95%. The premium will be added onto your mortgage and amortized over the length of your mortgage. You may have to pay sales taxes on the insurance premium.
Downpayment Impact on CMHC Mortgage Insurance Premiums for a $500K Home
CMHC Rule Changes in Response to COVID-19
On June 4th, the Canadian Mortgage and Housing Corporation (CMHC) announced that it was making changes to its insured mortgages to "protect future home buyers and reduce risk". The new requirements include:
- Gross Debt Servicing (GDS) ratios must be under 35% (previously 39%)
- Total Debt Servicing (TDS) ratios must be under 42% (previously 44%)
- At least one of the borrowers of the mortgage must have a credit score of at least 680 (previously 620)
- Borrowed downpayments (from any source) are not considered
These changes go into effect on July 1st, 2020.
Impact of New CMHC Rules on Borrowers
Gross/Total Debt Service (GDS/TDS) Ratios
The lower debt service ratio requirements may impact borrowers with larger mortgages, lower income or additional debt. Debt service ratios measure how much of your income will be spent on paying the mortgage, bills associated with your home and payments on other debt.
Future buyers should try to pay off their other debt in order to bring their debt servicing ratios lower to meet the new requirements.
Credit Scores
The higher credit score requirement of 680 (previously 620) may impact borrowers who have missed bill payments or have a limited credit history. Borrowers with a score lower than 680 will no longer be qualified for mortgage insurance by CMHC. Future buyers should look to improve their credit scores by paying their bills on time and making sure not to overutilize their credit.
Borrowed Downpayments
Buyers with borrowed downpayments from lines of credit, a HELOC, or other types of loans must have a minimum of 5% downpayment from non-borrowed sources and cannot use the borrowed amounts to reduce theirCMHC insurance premium. Borrowers can still use the borrowed downpayment to reduce their mortgage amount, however.
In this case, only your $25K downpayment from savings would count for your CMHC mortgage insurance. You would effectively have a loan-to-value (LTV) of 95% for the purposes of CMHC mortgage insurance and would have to pay a 4% CMHC mortgage insurance premium.
However, your combined downpayment would still count towards your home price and mortgage. You would only have to borrow $450K from your mortgage, not $475K.
Previously, the full combined amount of $50K would be considered for CMHC mortgage insurance and you would only need to pay a 3.1% CMHC mortgage insurance premium.
How to Increase Your Mortgage Affordability
There are a number of ways that borrowers can increase their mortgage affordability and lower their costs over the lifetime of their mortgage:
- Save up a larger downpayment: A larger downpayment can lower your mortgage borrowing and lead to smaller payments and less interest over the lifetime of your mortgage. You can also save on CMHC mortgage insurance and skip on mortgage insurance premiums altogether if you have a downpayment of 20% or more.
- Increase your credit score: If you have a low credit score, increasing your credit score could help your eligibility for mortgage insurance and better terms on your mortgage. Lenders are more willing to lend more to a borrower who has proven their ability to pay bills on time compared to one who has not.
- Shop around for rates: A lower mortgage interest rate can lower your regular mortgage payments, letting you handle a larger mortgage with your income. It can also save you tens of thousands over the course of your mortgage. Be sure to shop around for the best mortgage rates.
- Check out different lenders: Different lenders will have different standards for lending and offer different terms and conditions on their mortgages. Some offer additional features like RBC's Double-Up program. Going over your options with a mortgage broker can help you get the most from your mortgage.
- Increase your amortization: If you increase your amortization, you can reduce your regular payments and borrow more by spreading out the mortgage over a longer period of time. Doing so may increase your total interest, however, and decrease your choice of mortgage rates and lenders. Before committing to a decision, check how different amortizations will affect your mortgage and your monthly payments.