Loan Affordability Calculator
This calculator estimates how much total borrowing your gross income can carry once your existing monthly debt payments are counted, using the debt-service ceiling you choose to test. It returns a planning figure, not an offer or an approval.
$106,541.85 of borrowing room
This is arithmetic, not an approval. Lenders apply their own ceilings and also test housing costs, credit history and income stability. Federally regulated mortgage lenders commonly work to a total debt service ratio ceiling of about 44%.
What the calculator does with your inputs
The page combines your inputs in a fixed order: income first, then the debt-service ceiling you selected, then the debts you already carry, and finally the rate and term. Nothing else is read and no outside data is fetched. The output is a planning figure built entirely from the numbers you supplied, and it updates as you change them.
How the formula works, in words
- Divide gross annual income by twelve to get gross monthly income.
- Multiply gross monthly income by the debt-service ceiling to get the maximum total monthly debt service that income supports at that ceiling.
- Subtract your existing monthly debt payments. The remainder is the room available for a new payment.
- Convert that payment into a principal amount by discounting it at the expected annual rate over the term you entered.
Step four is where the estimate is softest. A Canadian fixed-rate mortgage is compounded semi-annually by law, so an annual rate typed into a monthly model does not behave exactly like a monthly compounding rate across a long amortization; the gap is small over short terms and widens as the term lengthens. Revolving credit is calculated on a different basis again. The Financial Consumer Agency of Canada explains how mortgage payments are structured.
What each input means
- Gross annual income — income before tax and other deductions. Debt-service tests use gross income, not take-home pay, so this figure will look larger than the money that reaches your account. Count income you can document and that is likely to continue.
- Existing monthly debt payments — the minimum amounts due on credit cards, installment loans, lines of credit, student loans and support obligations, plus housing costs if you are testing a total-debt view. Omitting one makes the result too generous.
- Expected annual rate — the rate you want to test. The calculator cannot know what rate a lender would offer you; that depends on the lender, the type of credit, the term, whether the loan is secured, your credit history and your province.
- Term — the number of years over which you would repay. A longer term lowers the monthly payment and raises the total interest paid.
- Debt-service ceiling — the share of gross monthly income permitted to go to debt service. Federally regulated mortgage lenders generally work to a total debt service ratio ceiling of about 44%, and qualify an uninsured mortgage at the greater of the contract rate plus 2 percentage points and 5.25%, as set out in OSFI Guideline B-20. Insured mortgages and provincially regulated lenders are not all subject to B-20.
What the result assumes
Every figure the calculator returns rests on assumptions you chose. It assumes the rate you entered holds for the whole term. It assumes you make every payment on schedule, with no late payments, no missed payments and no new debt appearing. It assumes the payment is level, blending principal and interest, with nothing else added to it. It assumes your income stays where you put it. It assumes the ceiling you selected is the right one for the lender and product you have in mind.
It also assumes that principal and interest are the only costs. Real underwriting often counts property taxes, heating, condo fees, insurance and sometimes closing costs inside the debt-service calculation, and each of those reduces the room available. Fees are not modelled here at all. That is why a result from this tool is a starting figure for planning rather than a quote.
Who decides, and who does not
loanmoose.ca is not a lender. It does not make credit decisions, set rates, or approve anyone. Only the lender you eventually deal with can decide whether to lend, how much, at what rate and on what terms, and that lender will weigh information this calculator never sees. Lending in Canada is licensed provincially, so the regulator and the rules differ by province and territory; the Financial Consumer Agency of Canada keeps a list of provincial and territorial regulators.
Frequently asked questions
What debt-service ratio should I enter in the calculator?
There is no single correct figure, because the ceiling depends on the lender, the product and the province. Federally regulated mortgage lenders generally work to a total debt service ratio ceiling of about 44%, while other lenders and other types of credit use different limits, and some are not bound by that guideline at all. A practical approach is to test a lower ceiling than the one you expect to face, so the estimate leaves room for taxes, heating costs and fees the calculator does not include.
Does a result from this calculator mean I will be approved for that amount?
No. The output is arithmetic performed on numbers you typed, and it says nothing about whether a lender would lend to you. Lenders weigh credit history, income documentation, employment, existing balances, the security offered and their own lending policy. Two people with identical income and debts can receive different answers, and loanmoose.ca does not make credit decisions or issue approvals.
Why does the calculator ask for gross income instead of take-home pay?
Because that is the basis most debt-service tests use. Lenders compare debt payments against gross income, before tax and other deductions, so the income figure entered here will be larger than the amount that lands in your bank account. If you enter take-home pay instead, the estimate understates your capacity and the result will not line up with how a lender reads the file.
Why does the calculator not fill in an interest rate for me?
Because no single rate applies. The rate you would actually be offered depends on the lender, whether the credit is secured, the term, your credit history and your province. Published benchmarks such as the Bank of Canada policy interest rate, prime rate and conventional mortgage rates are reference points rather than offers, and they are not attached to any individual borrower. Enter a rate you want to test and read the output as a scenario.
What costs does the affordability estimate leave out?
It leaves out anything that is not principal and interest. Property taxes, heating, condo fees, insurance, appraisal or setup fees, and closing costs are generally counted inside a real debt-service calculation, and each one reduces the room available for a new payment. The calculator also ignores income changes, rate changes on variable products, and any new debt you take on after today.
Can this calculator be used for any type of loan?
It is built for installment-style credit with a stated rate and a set term. Payday loans work differently. Where a province licenses payday lending, the federal Payday Lending Regulations cap the cost of borrowing at $14 per $100 advanced, some provinces set a lower cap, and Quebec does not license the model at all. A payday loan is generally up to $1,500 for a term of 62 days or less, and a debt-service calculation is not how those are underwritten.
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