Before you start viewing homes in Ottawa, it helps to know your realistic price range. This guide shows how lenders calculate your maximum mortgage and how to work out a budget you are comfortable with, which is not always the same number.
The two ratios lenders use
| Ratio | What it includes | Typical limit |
|---|---|---|
| GDS (gross debt service) | Mortgage payment, property tax, heating and half of condo fees | Around 39% of gross income |
| TDS (total debt service) | Everything in GDS plus car loans, credit cards, lines of credit and other debts | Around 44% of gross income |
Limits vary by lender and by whether your mortgage is insured. Ask a broker which limits apply to you.
The stress test changes the math
You must qualify at the greater of your contract rate plus 2 percentage points or 5.25%. Read more in our stress test guide. The higher the qualifying rate, the smaller the mortgage you can qualify for.
An illustrative example
This example is simplified and uses assumed numbers to show the method. It is not a quote.
- Household income: $120,000 per year ($10,000 per month)
- No other debts
- GDS limit of 39% gives a maximum housing cost of about $3,900 per month
- Assumed property tax and heat: about $500 per month, leaving about $3,400 for the mortgage payment
- Assumed qualifying rate of 7% and a 25-year amortization
At those assumptions, a $3,400 payment supports a mortgage of roughly $485,000. Add your down payment to estimate the maximum home price. Use our mortgage calculator to test your own numbers.
Affordable and comfortable are different
- Lenders do not count childcare, groceries, commuting or savings goals.
- Your qualifying maximum is a ceiling, not a target.
- Budget for maintenance, often 1% of the home’s value per year, plus utilities and insurance.
- Leave room for rate changes when your term renews.
How to increase what you can borrow
- Pay down credit cards and lines of credit. Lower debts raise your TDS room.
- Add a co-applicant with stable income, if appropriate.
- Save a larger down payment, which lowers the mortgage you need.
- Extend your amortization where eligible, which lowers the payment but increases total interest.
- Improve your credit score for access to more lenders.
Frequently asked questions
How much income do I need for a $600,000 mortgage in Ottawa?
It depends on your rate, debts, taxes and heating costs. Use the ratios above with the current qualifying rate, or ask a broker to run the numbers for your situation.
Does my down payment change how much I can borrow?
Your down payment does not change the maximum mortgage payment you qualify for, but it does affect the home price you can afford and whether you need default insurance.
Do lenders count rental income?
Some lenders count part of rental income from a basement or second unit. Policies vary, so check with your broker.
Find out how much you may qualify for
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