Question 1

How do Canadian lenders decide what I can afford?

Accepted Answer

Lenders use GDS and TDS ratios at the stress-test qualifying rate (the higher of contract + 2% or 5.25%). Housing costs (mortgage, tax, heat, half of condo fees) and total debts must stay within guideline maxima — typically 39% GDS and 44% TDS for both insured and conventional mortgages.

Question 2

What is the difference between Comfortable and Stretch budgets?

Accepted Answer

Comfortable uses advisory ratios (~32% GDS / 37% TDS). Stretch uses the regulatory maxima (39% / 44%). Stretch is what many lenders will allow; Comfortable leaves more room in a monthly budget.

Question 3

Why is my insured max price capped at $1.5 million?

Accepted Answer

CMHC (and private) default insurance is only available up to a $1.5M purchase price (since Dec 2024). Homes above that require at least 20% down and are uninsured.

How Much Can You Afford?