How to qualify for a bigger mortgage (and when not to)

The short answer

To qualify for a bigger mortgage, first find which limit you hit: GDS (housing costs), TDS (housing plus debts) or your down payment. Then work on that one. Paying off a debt only helps if TDS is the limit, more down payment helps most if the down payment is the limit, and more income or a longer amortization helps with either ratio.

The figures below are estimates from our calculator using one example household. Your own result depends on your income, debts, down payment, rate and the home's costs, so treat them as a guide to which lever matters, not a promise of approval.

Our baseline buyer earns $100,000, has $50,000 saved and pays $500 a month on a car loan and $250 on a credit card. At 4.12% over 25 years in Ontario, a lender's maximum is about $431,800, and the limit is TDS.

Step one: find what is holding you back

Lenders apply two ratios to your gross income at the stress-test rate: GDS of up to 39% for housing costs and TDS of up to 44% for housing plus all other debt payments. TDS allows 5 more points, which for the baseline buyer is about $417 a month. Debt payments above that amount generally make TDS the tighter limit; below it, GDS is usually the limit and paying off debt won't raise your maximum.

The GDS and TDS calculator shows both ratios for a given price, and the main affordability calculator tells you which test sets your maximum.

What each change does

Each row changes one thing from the baseline (maximum $431,800, limited by TDS):

1. Pay off or pay down a debt

Clearing the $500 car payment raises the maximum to $477,500, a gain of $45,700. Notice the new limit is GDS: once debts fall below the gap between the ratios, paying off more debt stops raising the maximum. Lenders look at the monthly payment, so paying off a loan completely helps more than paying part of it down unless the payment itself falls.

2. Add a co-borrower

A partner earning $40,000 with no debts lifts the maximum to $628,200. A co-borrower's debts count too, and they are fully responsible for the mortgage. See income needed to buy a house for how lenders count income.

3. Increase the down payment

Another $25,000 raises the maximum to $455,600, a gain of $23,800. While a ratio is the limit, extra down payment adds close to its own value to the price, a little less here because a higher price also carries more property tax. It helps more when the down payment itself is the limit, or when it takes you to a lower premium band or to 20%.

4. Choose a 30-year amortization, if you are eligible

First-time buyers and buyers of new builds can take 30 years on an insured mortgage. That raises this buyer's maximum to $456,700, at the cost of a premium 0.20 points higher and more interest over time. See 30-year amortization.

5. Shop for a lower rate

A rate 0.25 points lower raises the maximum to $440,000, because the qualifying rate falls with it. That only works while your rate plus 2 points is above the 5.25% floor. Below a contract rate of 3.25%, a cheaper rate lowers your real payment but not the rate you qualify at.

6. Look at lower property-tax areas

Property tax is a housing cost in GDS and TDS. The same buyer using Edmonton's 2026 residential rate (1.036%) could reach about $418,100; at Calgary's (0.665%) about $436,000. Condo fees work the same way: half of them count, so a condo with $400 a month in fees would cut this buyer's maximum to about $404,400. City rates are on the cities page.

Pay off debt or add to the down payment?

Say the baseline buyer could put $15,000 toward either clearing the car loan or the down payment:

• Pay off the car loan: $35,000 down, $250/month of debts. Maximum about $460,400 (limit: GDS).
• Add it to the down payment: $65,000 down, debts unchanged. Maximum about $445,500 (limit: TDS).

Here, clearing the debt buys $14,900 more house, because TDS was the limit and a $500 payment costs far more borrowing power than $15,000 of down payment adds. The answer flips if the down payment is your limit, or if paying the debt would leave you short of the minimum down payment or closing costs. Check both before you move money.

Other steps that help an application

• Credit: check your credit reports for errors and keep payments on time. Insured mortgages need a score of at least 600 for one borrower, and a stronger score can widen your choice of lenders.
• No new debt before closing: a new car loan or credit line after pre-approval can change your TDS. Lenders may check again before funding.
• Documents: have income proof ready, especially if you are self-employed or earn bonuses or commission, so the lender can count all of it.
• Pre-approval with a rate hold: it protects your qualifying rate for a period if rates rise. See pre-approval.

What helps less than it seems

• Borrowing the down payment. A loan for the down payment adds its own monthly payment to TDS, and with less than 10% down a borrowed (non-traditional) down payment carries a higher premium of 4.50% instead of 4.00%.
• A lower rate below the floor. Once your rate is under 3.25%, you qualify at 5.25% anyway. The lower rate still saves you money, but it won't raise your maximum.
• A 30-year amortization when you aren't eligible. With less than 20% down, a repeat buyer of a resale home is limited to 25 years.
• Paying down a balance without lowering the payment. If a loan's required payment stays the same, the lender's TDS doesn't change.

Before you stretch: cautions

• Don't max out. The lender's maximum ignores childcare, savings, transportation and maintenance. Many buyers set a personal limit well below it.
• Keep an emergency fund. A common rule of thumb is three to six months of expenses left over after closing. Don't empty it to reach a higher price.
• Plan for renewal. Your rate is fixed only for the term. A payment that only just fits today leaves little room if rates are higher at renewal.
• Budget for closing costs. Land transfer tax, legal fees and other costs come on top of the down payment. See closing costs.
• Count costs the lender doesn't. Home Buyers' Plan repayments, childcare, commuting and maintenance all reduce what fits in your budget even though the ratios leave them out.