One of the most common questions Canadian buyers ask isn’t what they want to buy, it’s what they can realistically afford.

 

In Montreal, affordability is shaped by:

  1. Your income
  2. Your debts
  3. Federal mortgage rules
  4. Interest rates set in Canada

Let’s break down how affordability is actually calculated, not emotionally, but financially.

 

How do lenders in Canada determine affordability?

Canadian lenders use two main ratios:

  1. Gross Debt Service (GDS)

    Housing costs should generally not exceed ~39% of gross income.

  2. Total Debt Service (TDS)

    All debts combined should generally not exceed ~44%.

 

Housing costs include:

  1. Mortgage payment
  2. Property taxes
  3. Heating & electricity
  4. Insurance
  5. Condo fees (if applicable)

Why salary alone isn’t enough

Two buyers earning the same salary can qualify for very different purchase prices depending on:

  1. Existing debts
  2. Down payment size
  3. Interest rate at qualification
  4. Property type

This is why online “salary calculators” are often misleading.

 

How the mortgage stress test affects buying power

In Canada, buyers must qualify at:

  1. The contract rate plus 2%, or
  2. The minimum qualifying rate (set federally)

This reduces borrowing power, especially in higher-rate environments, but it also protects buyers from overextending.

 

A realistic example

A buyer earning $100,000/year:

  1. With low debt
  2. 10% down
  3. Buying a primary residence

May qualify very differently from someone with:

  1. Car payments
  2. Credit balances
  3. Higher condo fees

Affordability is personal, not generic.

 

Bottom line

Your salary sets a framework not a guarantee.

Understanding affordability early:

  1. Prevents disappointment
  2. Saves time
  3. Leads to better decisions

 

📞 Want a personalized affordability breakdown?

👉 Book a buyer strategy call with LJ Realties

We help Montreal buyers plan with clarity, not guesswork.

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