Can I afford this?
Puts a purchase against the rest of your month: what comes in after deductions, what the purchase costs to carry, what is left, and whether that leaves room to absorb a surprise.
What comes in
Leave at zero for a single income. Each income is taxed separately.
What goes out already
Food, transport, childcare, phone, everything that is not debt or this purchase.
Cards, car loans, student loans, support.
Everything you have. The upfront cost comes out of this.
The purchase
Set aside monthly. One per cent a year is a common rule of thumb.
Based on the assumptions entered, this purchase appears high risk relative to the budget you described.
- The month does not close. On these figures the purchase, the existing debts and ordinary living costs come to more than what comes in.
- The housing cost takes more than 40% of your take-home pay.
- Together with your existing debts, more than 50% of your take-home is committed before you have bought food.
- What is left in savings covers about 0.0 months of essentials, below the three to six months usually suggested.
- Take-home a month
- $5,915
- The purchase
- $4,344
- Left at month end
- -$1,479
- Emergency fund
- $22,182 to $44,365
Housing against take-home73.4%
The marker is 30%, this site's own guide to comfortable rather than any lender's rule.
Everything committed, against take-home81.0%
The purchase plus your existing debts. The marker is 40%.
| Take-home pay | $5,915 |
|---|---|
| Mortgage payment | - $2,962.48 |
| Property tax | - $450.00 |
| Home insurance | - $140.00 |
| Utilities | - $250.00 |
| Maintenance set aside | - $541.67 |
| Existing debt payments | - $450 |
| Living expenses | - $2,600 |
| Left over -25.0% of take-home | -$1,479 |
| Savings before the purchase | $120,000 |
|---|---|
| Needed upfront | - $130,000 |
| Savings after | $0 |
| Months of essentials that covers three to six is the usual suggestion | 0.0 |
Take-home of $5,915 a month is an estimate that applies the basic personal claim and nothing else. It knows nothing about your TD1 credits, RRSP contributions, a pension, or a second job.
You are looking at $650,000. Whether that buys what you want depends entirely on where you look.
How the assessment is worked out
This asks a different question from how much house you can afford. That one asks what a lender would lend. This one asks what your month looks like afterwards, which is what decides whether the next three years are comfortable.
The difference shows up in the denominator. A lender measures your housing costs against your gross income, because its ratios exist to protect it rather than to describe your life. This page measures against your take-home, because that is the money that actually arrives.
The four things it looks at
- Does the month close? Take-home, less the purchase, less your existing debts, less ordinary living costs. If that is negative, nothing else matters.
- What share does the purchase take? Under 30% of take-home is comfortable. Over 40% is where the arithmetic still balances and the life around it usually does not.
- What is committed in total? The purchase plus every other debt payment. Under 40% of take-home is comfortable; over 50% means most of your pay is spoken for before you have bought food.
- What is left to absorb a surprise? Savings after the purchase, measured in months of essentials. Three to six months is the usual suggestion, and it is a range rather than a number because the right answer depends on how secure your income is.
Any one of those landing badly moves the result, and a result never improves once something has worsened it. A large emergency fund cannot buy back a month that does not close.
Where those thresholds come from
They are ours. They are not a lender's rule, not a CMHC ratio, and not a standard anybody publishes. They are a considered view of where a budget stops being comfortable, stated plainly so you can disagree with them. If your circumstances are unusual, they will be wrong for you, and the numbers behind the verdict are all shown so you can make your own judgement.
The take-home estimate, and its limits
When you ask this page to estimate your take-home, it runs your income through the same Canadian tax engine that powers Salary After Tax: federal and provincial income tax, CPP or QPP, and EI or QPIP, at the rates published for the current year. Two incomes are taxed separately and then added, because tax is progressive and individual, and running a household's combined income through one calculation would understate a couple by thousands.
What it does not know is everything specific to you: the credits you claimed on your TD1, RRSP contributions, a pension deduction, union dues, a second job, or self-employment. So it is an estimate, and there is a field to type your real take-home into instead. That figure is always better than this one.
This is not a lending decision
No result here means approved and none means declined, because this site has no standing to say either. A lender underwrites a person: your credit history, how long you have been employed, whether your income is steady, and the property itself. None of that is here. A pre-approval is free and is the only figure that carries weight.
What this assumes
- Your living expenses are what you say they are
- This is the input most often wrong, and always in the same direction. Most people underestimate it. If you have not looked at three months of statements, the figure you typed is probably low.
- Nothing changes
- The same income, the same expenses, the same rate. A renewal at a higher rate, a job change, or a child all move this, and none are modelled.
- Maintenance is set aside monthly
- Real maintenance arrives in lumps: a roof, a furnace, then nothing for six years. Treating it as a monthly amount is the right way to budget for it and the wrong way to describe it.
- The emergency fund is a range, not a target
- Three months may be plenty on two secure salaries. Six may not be enough on one variable income. The range is shown rather than a single number for that reason.
Sources
- How much you need for a down payment · Financial Consumer Agency of Canada · checked
- Mortgage loan insurance premiums · Canada Mortgage and Housing Corporation · checked
- CMHC Purchase: mortgage loan insurance for homeownership · Canada Mortgage and Housing Corporation · checked
- CMHC Home Start · Canada Mortgage and Housing Corporation · checked
The rules behind this calculator were last checked on .