Toronto mortgage guide
How much mortgage can I qualify for in Toronto?
Lenders look at three things: your income, your monthly debts and the cash you have saved. Here is how they turn those into a maximum purchase price, with a worked Toronto example.
By Spiro Vrysellas, Broker, Vrysellas Team, Elevate Realty Inc., Brokerage. Updated October 2026.
1. The stress test sets your qualifying rate
You do not qualify at the rate you will actually pay. Federally regulated lenders qualify you at the higher of your contract rate plus 2%, or 5.25%. If your rate is 4.5%, you qualify at 6.5%. This applies whether you put down 5% or 50%.
2. Two debt ratios set your monthly limit
- Gross debt service (GDS): your mortgage payment at the qualifying rate, property tax, heating and half of any condo fees should stay at or below 39% of gross monthly income.
- Total debt service (TDS): everything in GDS plus car loans, credit cards, lines of credit and student loans should stay at or below 44%.
Whichever ratio is tighter becomes your limit. When TDS is the tighter one, every $100 a month of debt you clear adds roughly $15,000 of mortgage room at a 6.5% qualifying rate.
3. Your savings set the minimum down payment
| Purchase price | Minimum down payment |
|---|---|
| Up to $500,000 | 5% |
| $500,000 to $1,499,999 | 5% of the first $500,000, plus 10% of the rest |
| $1,500,000 and up | 20% |
With less than 20% down, your mortgage must be insured. The premium is added to the mortgage: about 4.00% of the loan with 5% to 9.99% down, 3.10% with 10% to 14.99% down and 2.80% with 15% to 19.99% down. First-time buyers can take a 30-year amortization on an insured mortgage, which adds 0.20% to the premium and lowers the monthly payment.
Worked example
A couple buying their first home in Toronto. Combined income of $200,000 a year, $600 a month in other debt payments, $150,000 saved, and a 4.5% rate.
| Gross monthly income | $16,667 |
| GDS limit (39%) | $6,500 a month |
| TDS limit (44%, after $600 of debts) | $6,733 a month |
| Qualifying rate | 6.5% (4.5% plus 2%) |
| Maximum purchase price | About $959,000 |
| Minimum down payment | $70,900 |
| Mortgage, including insurance | About $925,400 over 30 years |
| Actual payment at 4.5% | About $4,670 a month |
Their savings cover the down payment with about $79,000 left for land transfer tax, legal fees and moving. In Toronto, closing costs are a bigger number than most buyers expect, so read our guide to cash to close before you set a budget.
Ways to raise your budget
- Pay down or close revolving debt before you apply.
- Look at a house with a rental unit. Many lenders count part of the expected rent toward your income.
- Compare lenders. Credit unions that are provincially regulated set their own qualifying rules.
- Get pre-approved early so your rate is held while you shop.
Frequently asked questions
Does the stress test apply if I put 20% down?
Yes. At federally regulated lenders, every new purchase mortgage is stress tested, insured or not.
Do I need to pass the stress test again when I renew?
No, as long as you renew without increasing the loan or the amortization. Since late 2024 you can also switch to another lender at renewal without being stress tested again, under the same conditions.
What counts as income?
Salary is straightforward. Self-employed income is usually averaged over two years of tax returns. Bonus and commission income normally needs a two-year history.
Is a pre-approval a guarantee?
No. It holds a rate and confirms the numbers look right, but final approval depends on the property and your documents.
More Toronto guides
Cash to close and land transfer tax Investment property cash flow and cap rate What you walk away with after sellingEstimates only. Lender rules change and every file is different. Speak with a mortgage professional before you make an offer. This is not financial advice.