# How Much Mortgage Can I Get With \$70000 Salary in Canada

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### Dennis Sabitoff

Jan 5, 2024, 5:39:01 AMJan 5
to How Much Mortgage Can I Get With \$70000 Salary Canada
In Canada, with a \$70,000 salary, a Gross Debt Service (GDS) ratio of 39%, a Total Debt Service (TDS) ratio of 44%, and an interest rate of 5%, you can typically afford a mortgage between \$245,000 and \$280,000. However, the exact amount can vary based on factors such as your credit score, down payment, and other financial obligations.

Understanding Mortgage Affordability

Mortgage affordability is a measure of how much a person can borrow for a home purchase, based on their income, expenses, and the terms of the loan. In Canada, lenders use two key ratios to determine this: the Gross Debt Service (GDS) ratio and the Total Debt Service (TDS) ratio.

The GDS ratio is the percentage of your pre-tax income that would go towards housing costs, including mortgage payments, property taxes, heating costs, and 50% of condo fees if applicable. The TDS ratio is similar to the GDS ratio but also includes other debt obligations such as credit card payments and car loans.

According to the Canada Mortgage and Housing Corporation, the maximum GDS and TDS allowed are 39% and 44%, respectively. However, these are guidelines, not strict rules, and some borrowers with good credit and a reliable income may be allowed to exceed these guidelines.
Calculating Mortgage Affordability with a \$70,000 Salary

To calculate how much mortgage you can afford with a \$70,000 salary, you can use the GDS and TDS ratios. For example, with a GDS ratio of 39%, your annual housing expenses should not exceed \$27,300 (39% of \$70,000). Similarly, with a TDS ratio of 44%, your total annual debt obligations should not exceed \$30,800 (44% of \$70,000).

Assuming an interest rate of 5%, you can use an online mortgage calculator to estimate your monthly mortgage payments and the total cost of the mortgage over time. For instance, with a \$70,000 salary, a general rule of thumb is that you can qualify for a mortgage of 3.5 to 4 times your annual income, which means you can likely afford a mortgage between \$245,000 and \$280,000.

However, these calculations are estimates and the actual amount you can borrow may vary based on factors such as your credit score, down payment, and other financial obligations.

Factors Influencing Mortgage Affordability

Several factors can influence how much mortgage you can afford:

1. Credit Score: Your credit score can affect the interest rate you're offered on a mortgage. A higher credit score can secure a lower interest rate, which in turn increases your buying power.

2. Down Payment: The size of your down payment can also affect how much you can borrow. A larger down payment reduces the amount you need to borrow, which can make the mortgage more affordable.

3. Other Financial Obligations: If you have other significant financial obligations, such as car loans or credit card debt, this can reduce the amount you can afford to borrow for a mortgage.

4. Interest Rate: The interest rate on the mortgage will significantly impact your monthly payments and the total cost of the loan over time.

Conclusion

In conclusion, with a \$70,000 salary, a GDS ratio of 39%, a TDS ratio of 44%, and an interest rate of 5%, you can typically afford a mortgage between \$245,000 and \$280,000 in Canada. However, the exact amount can vary based on factors such as your credit score, down payment, and other financial obligations. It's recommended to use online tools like a mortgage affordability calculator and consult with a mortgage professional to get a more accurate estimate based on your personal circumstances.