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    Loan Affordability Calculator

    Before you borrow, know your limits. This calculator estimates the maximum loan amount you can afford based on your income, existing debts, and expected loan terms.

    $5,000
    $1,000$20,000
    $800
    $0$10,000
    9%
    3%30%
    36 months
    1 year7 years

    You Could Borrow Up To

    $37,736

    Max Monthly Payment Room

    $1,200/mo

    Based on a 40% max debt-to-income ratio guideline.

    See what you actually qualify for

    Based on your calculation, check your approval odds with real Canadian lenders.

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    How Loan Affordability Is Determined

    Lenders determine how much you can borrow primarily through the debt-to-income (DTI) ratio. Most Canadian lenders use a maximum Total Debt Service (TDS) ratio of 40–44%, meaning your total monthly debt payments (including the new loan) should not exceed 40–44% of your gross monthly income.

    This calculator uses the 40% guideline — a conservative but widely-accepted threshold. It calculates your available "room" for a new payment by subtracting your existing debt obligations from 40% of your income, then works backward to determine the maximum loan amount that payment could support at the given rate and term.

    Why 40% and not higher? While some lenders allow up to 44% TDS, the 40% threshold provides a buffer for unexpected expenses and ensures your borrowing remains sustainable. Borrowing to the absolute maximum leaves no margin for financial changes like job loss, rate increases, or emergency costs.

    What's not included: This calculator provides a mathematical estimate. Lenders also consider your credit score, employment stability, assets, and other factors that can increase or decrease your actual borrowing capacity. A strong profile may allow you to borrow more than the calculator suggests; a weaker profile may mean less.

    Tips to Maximize Your Borrowing Capacity

    • 1Pay down existing debts before applying — every $100/month in reduced obligations adds roughly $3,000–$4,000 in borrowing capacity
    • 2Choose a longer term to increase the maximum amount (but be aware of higher total interest costs)
    • 3Improve your credit score to qualify for lower rates — lower rates mean higher maximum amounts at the same monthly payment
    • 4Include all income sources — bonuses, rental income, and side income can boost your qualifying income
    • 5Consider a co-borrower — combined income significantly increases affordability
    • 6If self-employed, time your application after a strong income year to maximize reported earnings

    Frequently Asked Questions

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    Sources & References

    1. 1
      canada.caChoosing a mortgage that is right for you (TDS/GDS guidance)
    2. 2
      osfi-bsif.gc.caResidential Mortgage Underwriting Practices and Procedures (Guideline B-20)
    3. 3
      bankofcanada.caSelected interest rates and exchange rates (prime rate)

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