How much house can I afford in Ontario in 2026?
Lenders don't look at the price you want. They look at your income, your debts and a payment at a rate higher than the one you'll actually get. Here is how that works, with numbers.
The answer surprises a lot of first-time buyers in the GTA, usually in the wrong direction. The reason is the stress test. Your bank might offer you 4.5%, but it has to approve you as if you were paying 6.5%. That one rule takes a big bite out of what you can borrow, so it's worth understanding before you start booking showings.
The two limits every lender checks
Lenders compare your housing costs and your total debts with your gross income (before tax). For an insured mortgage, your housing costs, meaning the mortgage payment, property tax, heating and half of any condo fees, can't be more than 39% of your gross monthly income. That is your GDS ratio. Your housing costs plus every other debt payment, like a car loan or student loan, can't be more than 44%. That is your TDS ratio.
The payment in both tests is calculated at the higher of your contract rate plus 2 percentage points, or 5.25%. That's the stress test.
What different incomes can afford
The table assumes a 4.5% mortgage rate (so a 6.5% qualifying rate), 25-year amortization, property tax of 1% of the price a year, $250 a month for heating and home insurance, and no other debts unless noted. Prices are rounded to the nearest $1,000.
| Household income | With $60,000 down | With $120,000 down | $120,000 down and a $600 car payment |
|---|---|---|---|
| $60,000 | $278,000 | $331,000 | $285,000 |
| $80,000 | $363,000 | $417,000 | $381,000 |
| $100,000 | $449,000 | $502,000 | $478,000 |
| $120,000 | $535,000 | $588,000 | $575,000 |
| $150,000 | $663,000 | $717,000 | $717,000 |
| $180,000 | $792,000 | $845,000 | $845,000 |
| $200,000 | $877,000 * | $931,000 | $931,000 |
* The down payment is below Canada's minimum for that price, so a lender would cap you lower or ask for more down.
Look at the last column. On a $60,000 income, a $600 car payment cuts the budget by about $46,000. The effect shrinks as income rises, and from about $150,000 up it disappears, because the 39% housing limit is reached before the 44% total debt limit. If your income is modest and you plan to buy in the next year or two, holding off on a new car loan makes a real difference.
Example: $120,000 household income, $120,000 saved
A couple earning $120,000 between them can qualify for a home around $588,000. Their mortgage would be about $468,000. At the 6.5% qualifying rate the payment works out to about $3,160 a month, which is what keeps them inside the 39% limit. The payment they would actually make at 4.5%, with Canadian semi-annual compounding, is closer to $2,590 a month.
Before closing they would also need cash for Ontario land transfer tax, about $8,235 on that price (first-time buyers get up to $4,000 of it back; Toronto adds its own municipal land transfer tax), plus legal fees, a home inspection and moving costs. Budget at least 1.5% of the price for closing costs on top of the down payment.
The down payment rules still apply
You need 5% of the first $500,000 and 10% of anything between $500,000 and $1.5 million. On a $700,000 home that's $45,000. Below 20% down you also pay CMHC insurance, 2.8% to 4% of the mortgage, added to the loan. Our mortgage rules guide has the full tables.
Ways to qualify for more
Paying off a car loan or credit card balance helps the most, because it frees up room under the 44% limit straight away. A larger down payment helps too, though less than people expect, since it only lowers the mortgage, not the qualifying rate. Adding a co-borrower's income raises both limits. A 30-year amortization is available to first-time buyers on insured mortgages and lowers the payment, which raises the amount you can borrow, at the cost of more interest over time.
One honest caution: being approved for a number doesn't mean you should spend all of it. The stress test was designed to leave room for rates to rise at renewal, and it doesn't know about daycare, a second car or helping family back home.
Put in your own income, debts, down payment and rate to see your maximum price under Canadian lending rules.
Open the House Affordability CalculatorFrequently asked questions
Does the stress test apply if I have 20% down?
Yes. Federally regulated lenders apply it to uninsured mortgages too. Most credit unions use a similar test.
Do lenders count my spouse's income?
Only if your spouse is on the mortgage as a co-borrower.
Is property tax really 1%?
It varies by city and by your home's assessed value. Check your municipality's current residential rate and put it into the calculator for a more exact answer.