What is the maximum mortgage I can qualify for?
Want the biggest mortgage you can qualify for? Read this and know the number in minutes.
Quick answer
Your maximum mortgage depends on four things: gross income, credit score, monthly debts, and the qualifying rules your lender uses (debt ratios, stress-test rate). In Canada lenders use GDS/TDS (rough guide: 39%/44%). In the U.S. many lenders look at debt-to-income (DTI) — often 43%–50% depending on loan type and compensating factors.
How lenders calculate maximum mortgage (step-by-step)
- Convert annual income to gross monthly income. Example: $120,000/year = $10,000/month.
- Apply the lender’s housing ratio. In Canada use GDS 39%: 0.39 × $10,000 = $3,900 allowed for housing costs (mortgage payment + taxes + heat + condo fees).
- Subtract expected property taxes and condo/other housing fees to get the potential mortgage payment.
- Convert that monthly payment to principal using the mortgage rate and amortization. Use an online mortgage calculator or this quick rule of thumb:
- At 5% interest, 25-year amortization, monthly payment per $100,000 ≈ $585.
- So a $2,915 mortgage payment ≈ $2,915 / $585 × $100,000 ≈ $498,000.
- Check total debt: lenders also test Total Debt Service (TDS) or DTI. Add monthly debts (car, credit cards) and ensure total is under the lender’s TDS/DTI cap.
Key numbers you control
- Credit score: higher score increases your borrowing power and lowers rate.
- Down payment: larger down payment reduces loan amount and may eliminate mortgage insurance.
- Debt reduction: paying off consumer debt raises your maximum.
- Rate shopping: lower interest or longer amortization raises your buying power.
Example calculation (clear)
Gross monthly income: $8,333
GDS max: 39% → housing budget = $3,250
Assume taxes/condo/heat = $500 → available monthly mortgage payment = $2,750
Using 5% / 25-yr → payment per $100k ≈ $585 → estimated mortgage ≈ $2,750 / $585 × $100,000 ≈ $470,000
Final usable mortgage depends on downstream TDS check and stress test.
Practical checklist to maximize your approved mortgage
- Get a free pre-approval. It locks in the qualifying number and identifies weak points.
- Improve credit score (short-term: correct errors; mid-term: reduce balances).
- Lower debts before applying.
- Increase down payment to lower loan-to-value (LTV) and avoid insurance.
- Lock a lower rate or choose longer amortization only when it makes sense.
Bottom line and immediate action
You can estimate your maximum mortgage in 10 minutes using your pay stubs and a mortgage calculator. For an accurate number based on local rules and the current stress-test rate, get a pre-approval.
Want a precise, lender-ready maximum mortgage number for your situation? Contact Tony Sousa — local mortgage-savvy realtor who runs quick pre-approvals and real numbers into offers.
Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
