1. What is the House Affordability Calculator?

The House Affordability Calculator estimates the maximum home price you can afford based on your income, debts, and standard lending multipliers used by Canadian financial institutions.

2. How Does the Calculator Work?

The calculator uses the standard affordability formula:

Where:

• \( Monthly\ Income \) — Your gross monthly income before taxes
• \( Multiplier \) — Typically 4-5x annual income (varies by lender)
• \( Total\ Debts \) — Your existing debts and liabilities

Explanation: Canadian lenders typically approve mortgages that are 4-5 times your annual income, minus any existing debts.

3. Importance of Affordability Calculation

Details: Calculating your affordable price range helps set realistic expectations when house hunting and ensures you don't overextend financially.

4. Using the Calculator

Tips: Enter your gross monthly income, select a multiplier (4.5 is typical in Canada), and include all existing debts. The result shows your estimated maximum affordable home price.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical multiplier in Canada?
A: Most Canadian lenders use 4-5 times your gross annual income, with 4.5 being common for borrowers with good credit.

Q2: What debts should I include?
A: Include all recurring debts - car loans, credit cards, student loans, and any other personal loans or lines of credit.

Q3: Does this include the down payment?
A: No, this calculates the total home price you can afford. You'll still need a down payment (typically 5-20% in Canada).

Q4: What about property taxes and utilities?
A: This is a simplified calculation. Lenders will also consider property taxes, heating costs, and other housing expenses in their final assessment.

Q5: How does the stress test affect this?
A: Canada's mortgage stress test requires you to qualify at a rate about 2% higher than your contract rate, which may reduce what you can borrow.