Income Needed To Get A Mortgage In Canada

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Your income is one of the many factors that help determine your mortgage affordability. Along with your income, mortgage lenders also consider your monthly debt payments and monthly housing costs to determine how much mortgage you can afford. Basically, the lenders want to ensure that your income is sufficient to cover your mortgage payments along with other debt and housing payments.

Another key factor that affects your mortgage affordability is the ongoing mortgage rates. This is because monthly mortgage payments increase as mortgage rates go up, which reduces affordability. This means that with the same salary, you can qualify for a larger mortgage amount when the mortgage rates are low than when the mortgage rates are high. WOWA.ca’s July 2024 study of mortgage affordability over 50 years suggests that in 2023, unaffordability reached its peak since 1991. This was the time when mortgage rates were significantly high. Read below to find out how different factors affect the income required to get a mortgage in Canada.

The income requirement to buy an average home in Canada and its provinces, and the change in income requirements from January 2025 to January 2026, are as follows:

The income requirement to buy an average home in major Canadian cities as of January 2026 is as follows:

To determine how much mortgage you can really afford, mortgage lenders compare your income with your debt payments using debt service ratios. The debt service ratios are also used during a mortgage stress test to determine whether you’ll be able to afford mortgage payments even if mortgage rates go up.

Mortgage lenders use two debt service ratios to determine your capacity to service mortgage payments – Gross Debt Service (GDS) and Total Debt Service (TDS). These ratios determine how much of your income will go towards paying for your housing costs and making debt payments. The maximum permissible GDS and TDS ratios vary from lender to lender based on their risk tolerance; however, Canada Mortgage and Housing Corporation (CMHC) has set a maximum limit for these ratios for insured mortgages. The lower your debt service ratios are, the better your chances of mortgage approval.

• GDS Ratio - The GDS Ratio is the ratio of your housing costs to your household’s gross income. The housing costs include mortgage payments, property taxes, heating costs, 50% of condo fees / HOA fees (if applicable) and site/land rent. For CMHC-insured mortgages, this ratio must be less than 39%.
• TDS Ratio - The TDS Ratio is the ratio of your housing costs and debt payments to your household’s gross income. The debt payments include credit card debt payments, car loan payments/lease payments, line of credit debt and any other loan payments. For CMHC-insured mortgages, this ratio should be less than 44%.

All federally regulated mortgage lenders require you to pass the mortgage stress test to determine whether your income is enough to keep up with mortgage payments if the interest rates were to increase in future. A qualifying rate, also called a stress test rate, is used for qualification to ensure that you will still be able to afford the mortgage payments if the mortgage rates increase. The qualifying rate is the higher of -

• the benchmark rate of 5.25%, and
• the current mortgage rate plus 2%.

Your income needs to be high enough so that the debt service ratios do not exceed the maximum limits required by the lenders. This means that for CMHC-insured mortgages, the GDS ratio must not exceed 39%, and the TDS ratio must not exceed 44%, even with the qualifying rate.

Credit unions, private lenders and b-lenders aren’t required to conduct a stress test and may be a good option for homebuyers who have failed a stress test or are looking to avoid one.

If you fail to qualify for a mortgage based on your current income, one of the ways to qualify is to pay a higher down payment. This is because paying a higher downpayment will reduce your mortgage amount and, in turn, your mortgage payments. Your current income may not be enough for the mortgage amount you originally wanted, but you could qualify for a lower mortgage amount.

You could consider withdrawing from your RRSP (Registered Retirement Savings Plan) or your TFSA (Tax-Free Savings Account) to increase your downpayment. Some people also choose to borrow from their parents or other close relatives to increase their downpayment. You can also check out downpayment assistance programs available in your province. If you plan to buy a home in a few years, you could start saving for a downpayment with an FHSA (First Home Savings Account)

To get an estimate of how much mortgage you will qualify for based on your unique situation, you can get a mortgage pre-approval.

The income needed to get a mortgage of a particular amount can vary based on many factors, and every case is unique. However, we have made calculations below based on some assumptions to help you understand how lenders decide whether your income is sufficient to qualify for a mortgage. The qualifying rate used for the stress test is used for calculations, as the mortgage applicant will have to pass the stress test to qualify for a mortgage.

Let us compare two scenarios where the mortgage amount is the same, but other parameters differ.

In the above example, house 1 has a standard amortization period of 25 years and house 2 has an amortization period of 30 years and house 3 has an amortization period of 35 years. It is evident that increasing the amortization period can decrease the income requirement. However, the total interest paid increases significantly with increasing amortization.

Let us compare two scenarios where the mortgage amount is the same, but the home values differ, changing other parameters as well.

In the above example, house 1 has a greater price than house 1, but the mortgage amount for both of them is the same. Assuming that the two houses are located in the same locality, it is likely that house 1 is bigger than house 2 and will have a higher property tax and heating cost. Meanwhile, the monthly mortgage payment of house 2 is higher despite the mortgage rate being lower, as it includes CMHC premium payments as well. It is evident from the above example that even though the mortgage amount is the same, the minimum income requirement for both homes is slightly different based on different factors.

Another example is where the mortgage amount is the same, the amortization is the same, and the housing costs are the same, but the debt payment amount is different. Let us compare the two scenarios below:

In the above scenario, both buyer 1 and 2 purchase similar homes with the same home price and mortgage amount in the same locality. However, buyer 1 has to make monthly payments for other debt, while buyer 2 does not have any other debt. Due to this, buyer 1 has a higher income requirement for the same mortgage amount.