How much second home can you afford?

Because most bank calculators answer an easier question. They often size a mortgage from your income alone, at your contract rate, without the carrying costs of the home you already own. This one qualifies you at the stress test rate, counts both properties' mortgages, taxes and heating against the same 44% limit, and adds the default insurance premium to the loan. The result is smaller, and it is the number a lender is more likely to arrive at.

Total Debt Service ratio: the share of your gross monthly income that can go to all housing costs and debt payments combined, including both mortgages, property taxes, heating, condo fees, car loans, and other debts. Canadian lenders cap it around 44%.

Federally regulated lenders must qualify you at the higher of your contract rate + 2% or 5.25%, even though you'll pay the contract rate. It reduces the mortgage you qualify for, and it applies to second homes and investment properties too.

No. The qualifying rate only decides how large a mortgage you are approved for. Your payments are calculated at the contract rate you negotiate. The stress test is a buffer the regulator requires, not a rate you are charged.

A rental or investment property requires at least 20% down. A secondary home you live in yourself can be insured with 5% down on the first $500,000 and 10% on the rest, up to a $1.5M purchase price. Above that, 20% applies. With less than 20% down, a mortgage default insurance premium of roughly 2.8 to 4% of the loan is added to your mortgage, and the calculator includes it.

No, and the difference is expensive. A secondary home you occupy part of the year, such as a cottage, can be insured with less than 20% down. A property you buy to rent out is an investment property and needs at least 20% down, with no insurance available. Choosing the wrong one in the calculator changes the answer substantially.

Lenders discount rental income to allow for vacancies, repairs, and management costs, typically counting 50 to 80% of it. This calculator adds 70% of the rent to your income, which sits in the middle of the common range. The exact treatment varies by lender, and some use a rental offset against the property's costs instead.

It protects the lender, not you, and it is mandatory on an owner-occupied home bought with less than 20% down. The premium is a share of the loan that rises as your down payment shrinks: about 2.8% at 15% down, 3.1% at 10% down, and 4% at 5% down. It is normally added to the mortgage rather than paid up front, so it increases the balance you carry.

25 years. If your down payment is under 20% the mortgage must be insured, and an insured mortgage cannot amortize beyond 25 years, so the calculator holds that cap even if you ask for longer.

Mortgage principal and interest, property taxes, heating, and condo fees, for both the home you own and the one you are buying. This calculator counts the full condo fee rather than the half some lenders allow, which makes the estimate slightly conservative. Property tax is estimated from the price, so it rises as the price you can support rises.

Yes, in full, along with its property tax and heating. Unless you are selling it, a lender treats both properties as debts you carry at the same time, and that is usually the single largest reason a second property qualifies for less than the first one did.

More than people expect. Lenders do not use your actual payment, they impute one: 3% of the outstanding balance, every month, whether or not you pay it down faster. A $20,000 line of credit is treated as a $600 monthly obligation, which can cost you roughly $100,000 of purchase price.

It means your income could support a larger mortgage, but the minimum down payment rules cap the price at what your cash allows. The opposite case, limited by your income, means more cash would not help until your income or debts change. The result tells you which one is binding, because that determines what would actually move the number.

Land transfer tax, legal fees, inspections, and moving costs, none of which a lender counts in debt servicing but all of which you have to pay. It also uses one national set of rules rather than provincial variations, and does not model equity you could take out of your current home. The methodology page lists every omission.