Question 1

How does the Canadian mortgage stress test work?

Accepted Answer

The Canadian mortgage stress test (B-20 guideline) requires borrowers to qualify at the higher of their contract mortgage rate plus 2%, or 5.25% (the benchmark rate). This means even if you get a 4.5% mortgage rate, you must prove you can afford payments at 6.5%. The stress test applies to both insured and uninsured mortgages at federally regulated lenders.

Question 2

What are GDS and TDS ratios in Canada?

Accepted Answer

GDS (Gross Debt Service) ratio measures your housing costs as a percentage of gross income — it must be 39% or less. Housing costs include mortgage payment, property taxes, heating, and 50% of condo fees. TDS (Total Debt Service) ratio includes all debt payments (housing + car loans, credit cards, student loans, etc.) and must be 44% or less of gross income.

Question 3

How much house can I afford with $100,000 income in Canada?

Accepted Answer

With a $100,000 gross annual income, minimal debts, and a 10% down payment, you can typically afford a home in the range of $450,000 to $550,000 depending on current interest rates, property taxes, and heating costs in your area. The stress test is usually the binding constraint. Use this calculator to get a precise number based on your specific financial situation.

Question 4

What is the minimum down payment in Canada?

Accepted Answer

In Canada, the minimum down payment depends on the purchase price: 5% for homes up to $500,000, 5% on the first $500,000 plus 10% on the portion between $500,000 and $999,999, and 20% for homes at $1,000,000 or above. CMHC mortgage insurance is required for down payments under 20%, with premiums ranging from 2.8% to 4.0% of the mortgage amount.

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