Mortgage Payments And Income

The usual rule for figuring out the size of your mortgage payments versus you income is a maximum of 35% of your gross income for property taxes, heating, mortgage payments and ½ your condo fees (if applicable). A maximum of 42% of your gross income is used if you have additional debt payments.

The percentages are known as the Gross Debt Service ratio (GDS) and the Total Debt Service (TDS) ratio. They aren’t cut in stone, there is usually a bit of wiggle room.

Here’s a great calculator for the GDS and TDS: CMHC debt service calculator. But make sure you are including the proper stress test interest rate.

Once you know how big a mortgage payment you can have, you need to use that number to calculate your maximum mortgage size. Play around with the numbers because rates, amortization and other factors greatly affect the result you get. And you should leave a bit of a buffer if you can. It can be uncomfortable pushing up against your limit financially every month.

Here’s a mortgage calculator

mortgage payments and income

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