Let’s be real — buying your first home is an exciting yet daunting experience, especially in the hot Canadian real estate market. It’s natural to feel overwhelmed by the range of emotions — from excitement to exhilaration, all the way to apprehension and disappointment — but don’t worry!

At AskAhmad.ca and the Total Mortgage Source, our core mission is to help new home buyers navigate the home-buying process. As established mortgage brokerages working with multiple banks and lending institutions, we know the ins-and-outs of this process inside out and have been helping Canadians achieve their dream of homeownership!

Before you begin searching for the perfect home, it’s important to figure out how much mortgage debt you can take on. In this post, we’ll help you do just that by walking you through the lender evaluation process, showing you how to determine how much mortgage you can afford, and highlighting some other important considerations to keep in mind before you secure your mortgage and ultimately move into your new home.

In Canada, there are several different ways to get a mortgage. The most common way to get a mortgage is through one of the big Canadian banks, but you can also get a mortgage from an independent lender. We work with several lenders in Canada to help you find the right product to meet your needs.

Lenders use a number of factors to decide how much money they will lend you for a mortgage.

Lenders use a variety of factors to determine your borrowing capacity, and rules have become even clearer in recent years. As the Canadian housing market has been rapidly growing over the past few years, the government has introduced a stress test for home buyers—a way for lenders to be confident that if interest rates increase or you lose your job, you can continue making your monthly payments.

The stress test determines how much you can borrow by using a qualifying rate—5.25% as of June 2021—and then determines whether or not you can make your monthly payments at 2% above that amount. So if interest rates increase or you lose your job and can’t pay your mortgage, you’ll be able to keep up with payments because they’re not too high relative to your income and debts.

Borrowers must undergo a stress test to determine how much mortgage they can afford. Lenders also take into account your overall income, your credit score, the size of your down payment and debt and liabilities when calculating how much mortgage you can afford. It is recommended to get pre-approved for a mortgage before looking for a home so that you can look for one that you can afford.