Required income calculator
This sketch asks what gross income would keep housing near 39 percent of income, and housing plus other debts near 44 percent. It also repeats the sketch at the rate you typed plus two percentage points. Neither figure is an approval.
Any rate or payment mentioned is illustrative and on approved credit (OAC). It is not a quote, a commitment, or a current offer.
Enter a price, a down payment, a rate, and an amortization. Tax, heat, and debts can stay blank and will be treated as zero, which makes the income look too low.
Lenders ask a simple question in a complicated way: does the income cover the housing payment and the other debts, with room left over. This page turns that question around. You type a purchase price, a down payment, a rate, an amortization, monthly property tax, monthly heat, and the other monthly debt payments. The page estimates the gross annual income that would keep two common ratios inside the ceilings people see on ordinary owner-occupied files. It is an illustration. It is not an approval, and the rate box starts empty on purpose.
The two ratios are gross debt service and total debt service. Gross debt service puts the mortgage payment, property tax, and heat on one side and gross income on the other. A figure you will hear is 39 percent. Total debt service adds the car loan, the credit cards, the support payments, and any other monthly debt the lender counts, and a figure you will hear is 44 percent. Some programs use different ceilings. A self-employed file, a rental, a co-signer, or a private lender can be written on another worksheet entirely. Do not treat 39 and 44 as a rule MKG invented or as a rule every lender will honour.
The payment itself is calculated from the mortgage amount, which is the price minus the down payment you typed, at the rate you typed, over the amortization you typed. Canadian residential mortgages are usually compounded semi-annually, not monthly, and the payment is monthly. This sketch uses monthly compounding because that is a clear way to show the arithmetic. A lender's disclosure will use its own formula. The difference is real and usually modest next to the difference a one-point rate change makes. If you need the lender's payment, use the payment on their commitment, not this page.
There is a second income figure, and it is the one that surprises people. Federally regulated lenders stress the payment. OSFI's Guideline B-20 tells them to qualify at a rate higher than the contract rate, using the greater of a floor and the contract rate plus a buffer. The buffer people plan around is two percentage points. This page shows the income that fits at the rate you typed, and the income that fits if that rate is two points higher. The higher figure is not a rate we are offering. It is the contract rate you entered, plus two, used only so you can see how much income the stress test asks for. Credit unions and private lenders do not all follow that guideline.
Down payment changes the mortgage, and it changes whether insurance even applies. Insured programs can allow 5 to 10 percent down depending on the program, the way income is verified, and a purchase price under $1.5 million. You may qualify with less than 20 percent down, subject to lender and insurer approval. This calculator does not add the insurance premium to the mortgage. A real insured file would, and the premium increases the payment. If your down payment is under 20 percent, treat the income result as a floor that is still missing that premium. The home purchase page describes how that insurance works.
Property tax and heat are not optional in a real application, which is why the boxes are here even though you may not know the tax yet. Use the tax from the listing or from the city, divided by 12. Use a heat figure the lender would accept, often a standard amount if you do not have a bill. Leaving them blank treats them as zero, which makes the income look too low. Condo fees are not a separate box. If you are buying a condo, a practical sketch is to put half the monthly fee into the heat box and remember that you did it. The status certificate is where the real fee lives.
Other debts are the TDS half of the page. Type the actual monthly payments, not the balances. A credit card with a balance and a small minimum payment is still a payment the lender may gross up. This page uses the number you type. If you type the minimum and the lender uses three percent of the balance, their income requirement will be higher. Car leases count. Lines of credit count. A debt you intend to pay off before closing counts until the lender sees it paid.
The page does not know your credit, your job letter, or whether the income is employed or self-employed. Employed income is usually salary or an average of variable pay, with a letter and pay stubs. Self-employed income for an insured CMHC file is verified income: the notice of assessment, the T1 General, and the T2125, with a possible 15 percent gross-up or add-backs, and a history of about 24 months with some flexibility. Stated-income programs such as Sagen BFS Alt A keep line 15000 in view. They are not a way to type a wish into this calculator. If you type income the tax return does not support, the calculator will still draw a number, and the lender will not use it.
Price and down payment should be amounts you can actually write into an offer. The land transfer tax is not in this sketch. In Ontario it is a separate amount of cash, and in the City of Toronto there is a second municipal tax. On a $500,000 single-family residence each of those taxes is $6,475 under the brackets this site uses, together $12,950 before rebates. A file that needs every saved dollar for the down payment has not planned the closing. Use the closing-cost tool for the tax, then come back here.
How to read the result. You will see a mortgage amount, a monthly payment at the rate you typed, the gross income that keeps the 39 and 44 percent sketches inside those ceilings at that rate, and the same income at the rate plus two points. The larger income is the one to plan around if the lender is federally regulated. If your household income is below it, the levers are a lower price, a larger down payment, a longer amortization if the lender allows it, or fewer other debts. The page will not rank those levers, and it will not say which one you should pick.
Two incomes in one household are added together only if both people will be on the mortgage and both incomes are documentable. This page has one income result, not two salary boxes. Add the gross incomes yourself and compare the total with the result. A co-signer who will not live there is a different file, and many lenders treat that income with extra conditions. Do not assume a parent's income drops straight into the 39 percent.
Rental income from a basement is also not in this calculator. A legal secondary suite can offset part of the payment when the program allows a percentage of market rent. The rental suite qualifier is the page for that sketch. Mixing the two tools means you type the rent offset there, not by inflating your salary here.
What to bring if the sketch is in the range you hoped for. The price, the down payment source, a tax bill or a listing sheet, and the debts. Employed buyers bring a job letter and recent pay stubs. Self-employed buyers bring two years of notices of assessment and the T1s. The first call is free. The lender still decides, and any rate used in the conversation is the rate you were shown elsewhere, discussed as an illustration on approved credit. This page never starts with a rate of its own.