The All Canadian Mortgage Affordability Calculator

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With the average home price in Toronto skyrocketing $550 per day it’s no wonder so many people are looking to get into the housing market sooner rather than later. But the most asked question that I get is how much mortgage can I afford?

A quick and easy way to do this is to use a simple mortgage calculator. Now there are many factors that a mortgage broker will need to take into consideration to see if you will actually qualify and be able to make those payments but this gives you a good basis to start your research with.

Whether you are a first time home buyer, looking to refinance an existing mortgage, or a seasoned real estate investor the process is the same and this affordability calculator will get you pointed in the right direction. To jump directly to the mortgage affordability section click here

Basic Mortgage Calculator Inputs

Income

This is the first section on my mortgage calculator. You want to put in an average of the last two years of your income to give you a better measure.

Debt Payments

Do you have monthly debt payments? Include them here. Things that you don’t have to take into consideration would be cell phone, insurance, and cable bills. Do include car payments, credit card payments and any outstanding loans (including OSAP or other student loans).

Rate

What mortgage rate are you looking to qualify for? There are many differences between fixed and variable rates, but to keep things conservative in your calculation put in a bank posted rate. Remember that the majority of the time I can beat any rate thrown at you by a bank, but that should just be icing on the cake. Not the entire cake. So lets play it safe. As of writing most banks are advertising a 5 year fixed rate of 2.7% so this would be a good number to use.

Amortization

How long do you plan on repaying your mortgage? If you are looking to put down less than 20% of the purchase price keep in mind that you will have a cap of 25 years for amortizing the loan. If you put down at least 20% of the purchase price then we do have higher amortization periods of 30-35 years which will help keep your monthly payments lower.

Heating

Estimate your monthly heating costs here. Sometimes you can find this information posted on an MLS listing for a property so check there first if you have a property in mind.

Condo Fee

Are you thinking of moving into a condo? Condos will often list their maintenance fees in the MLS listing as well. I’ve bought and sold enough condos in downtown Toronto to know that these fees are a necessary expense of high rise living! If you want to estimate a price for newer buildings the maintenance cost is usually around .50 per sq/ft and .70 per sq/ft for older buildings. Again, this is just a rule of thumb and YMMV.

Property Tax

If you are shopping in the same neighbourhood you should have an old property tax bill kicking around you can reference as a guide. If not, you can reach out to a local real estate agent to obtain this information. All of my 1 bedroom or 1+den condos have come in around $1800-$2400/per year for property taxes.