1. What is the Mortgage Affordability Calculator?

This calculator determines how much mortgage you can afford based on your gross income, expenses, and current interest rates in Ontario, Canada, using the standard Gross Debt Service (GDS) ratio.

2. How Does the Calculator Work?

The calculator uses the mortgage affordability formula:

Where:

• \( \text{Gross Income} \) — Your annual pre-tax income in CAD
• \( \text{GDS Ratio} \) — Gross Debt Service ratio (typically 39% in Canada)
• \( \text{Expenses} \) — Annual property taxes, heating, condo fees, etc.
• \( \text{Monthly Rate} \) — Monthly interest rate (annual rate ÷ 12)

Explanation: The formula calculates the maximum mortgage payment you can afford based on your income and expenses.

3. Importance of Mortgage Calculation

Details: Proper mortgage calculation helps prevent over-borrowing and ensures you can comfortably make payments while covering other living expenses.

4. Using the Calculator

Tips: Enter your gross annual income, standard GDS ratio (39%), annual expenses related to home ownership, and current mortgage interest rate.

5. Frequently Asked Questions (FAQ)

Q1: What is GDS ratio?
A: Gross Debt Service ratio is the percentage of your gross income needed to cover housing costs (mortgage, taxes, heating, etc.). In Canada, lenders typically use 39%.

Q2: What expenses should I include?
A: Include property taxes, heating costs, condo fees (if applicable), and 50% of condo maintenance fees for townhomes.

Q3: How accurate is this calculator?
A: It provides a good estimate, but actual mortgage approval amounts may vary based on credit score, other debts, and lender policies.

Q4: What's the difference between GDS and TDS?
A: TDS (Total Debt Service) includes all debt payments (car loans, credit cards, etc.) and typically shouldn't exceed 44% of income.

Q5: Does this include down payment?
A: No, this calculates the mortgage amount only. You'll need additional funds for down payment (typically 5-20% of home price).