A loan affordability calculator is a fast way to estimate how much can I borrow for a mortgage, car loan or personal loan. Start here to get a realistic range before you apply — this saves time and helps protect your credit score by avoiding unnecessary hard inquiries. This guide explains what these calculators use, how to use one correctly, and what the results mean for mortgage affordability in Canada.
What a loan affordability calculator does
Estimates borrowing capacity using income, debts and interest rate assumptions.
Shows monthly payment expectations for different loan sizes and amortizations.
Uses Canadian rules like typical GDS/TDS ratios used by lenders and CMHC for insured mortgages.
What to gather before you start
Pay stubs and gross annual income (include bonuses if regular).
Recent balance on debts: credit cards, lines of credit, car loans, student loans.
Planned down payment and savings (RRSP, TFSA, RESP can affect plans).
Estimated property taxes, heating costs, condo fees (for mortgages).
Desired amortization (e.g., 25 years) and expected interest rate.
Step-by-step: How to use a loan affordability calculator
Choose the right calculator. Pick a tool tailored to your loan type — mortgage, auto, or personal. For mortgages, use a Canadian calculator that considers GDS/TDS ratios.
Enter gross income. Use total pre-tax income (salary, self-employment, rental).
Add recurring debts. Input minimum monthly payments on credit cards and loans.
Enter down payment and savings. For mortgages, the down payment affects whether mortgage insurance is needed.
Choose interest rate and amortization. Try the current posted mortgage rates and a standard amortization (e.g., 25 years).
Include housing costs. For mortgages, add estimated property taxes, heating, and condo fees.
Run the calculation and review outputs. Note maximum loan amount, monthly payment, GDS (Gross Debt Service) and TDS (Total Debt Service) ratios.
Interpreting results (Canada-specific)
GDS and TDS: Lenders commonly look for a GDS below about 35–39% and a TDS below 40–44%. These ranges affect mortgage affordability in Canada and whether you qualify for mortgage default insurance via CMHC.
Down payment thresholds: If your down payment is under 20% you'll need mortgage insurance (CMHC/SCHL rules apply). That insurance affects what lenders will approve.
Credit score and debt levels: The calculator's estimate is a starting point; your actual lending limit depends on credit score and lender policies.
Helpful resources:
See CMHC's guidance on mortgage rules and qualification for insured mortgages via the CMHC mortgage guidance.
Check current policy rates at the Bank of Canada — interest rates.
Use the FCAC budget planner for a full household budget check.
Example calculation (quick)
Gross annual income: $90,000
Other monthly debts: $300 (car) + $150 (credit card minimum) = $450
Down payment: $60,000
Interest rate assumed: 5.0%
Amortization: 25 years
Result: The calculator might show a maximum mortgage around $420,000 with monthly payments ~ $2,500 and GDS/TDS within typical lender limits. Actual approvals vary by lender and mortgage insurance requirements.
Practical tips to increase how much you can borrow
Reduce high-interest debt (pay down credit cards or consolidate).
Increase your down payment to lower loan-to-value and avoid mortgage insurance.
Improve your credit score by making on-time payments and correcting errors on your credit report.
Consider co-borrowers (spouse or common-law partner) to combine incomes.
Adjust amortization (longer amortization lowers monthly payments but increases total interest).
When to use a professional
If you're close to the limit and need precise approval amounts, talk to a mortgage broker or lender.
For complicated income (self-employed, rental, commission), bring documentation to a broker to get a pre-approval.
If you'll need mortgage insurance, a broker can compare CMHC and private mortgage insurer options.
Next steps
Use a reputable Canadian calculator (banks, mortgage brokers or CMHC).
Get a pre-approval to lock in a rate and a firm borrowing limit.
Keep your credit activity quiet between pre-approval and closing.
Useful links:
CMHC mortgage guidance and tools: CMHC — Mortgage calculators and guidance
Bank of Canada interest rates: Bank of Canada — Rates
FCAC budgeting and mortgage info: Financial Consumer Agency of Canada — Budgeting and mortgages
CRA My Account for income verification: CRA My Account