How this calculator works

1. Usable income. Your gross annual income divided over 12 months, plus other monthly income, plus the share of rental income a lender would count (you set the share; 70% is a common midpoint of the 50 to 80% range lenders use).
2. Monthly debt allowance. Usable income multiplied by the Total Debt Service (TDS) limit, 44% by default. This is the ceiling on everything you pay monthly: both mortgages, property taxes, heating, condo fees, and other debts.
3. Existing obligations.Your current mortgage payment, your current home's property tax and heating, fixed debt payments, and 3% per month of any revolving balances (line of credit, credit cards) is subtracted from the allowance.
4. Stress tested payment capacity. Whatever room remains becomes the payment for the new mortgage, priced at the qualifying rate: the higher of your contract rate plus 2% or 5.25%. You pay your contract rate; you qualify at the stress rate.
5. Solving for the price.The new home's property tax depends on its price, and the price depends on the budget left after tax. The calculator solves this circular dependency by iterating until the numbers agree, instead of guessing tax from a proxy the way simpler tools do.
6. Down payment rules. The result is capped by the minimum down payment rule for your property type, and if your down payment is under 20% on a secondary home, the mortgage default insurance premium is added to the loan and the amortization is capped at the insured maximum.

The final number is the lower of the income limit and the down payment limit, and the results panel tells you which one is binding, because the fix is different for each.

Being upfront about limits is part of being trustworthy. Today the calculator does not model:

• The GDS test. Lenders apply two ratios: GDS (housing costs only, around 39%) and TDS. We apply only TDS. For borrowers with low non housing debt, GDS can occasionally be the tighter constraint, which would make our estimate slightly generous.
• Lender specific rental treatment. Some lenders offset rental income against the property's expenses instead of adding it to income. The add back method we use is the most common, but results vary by lender.
• Type B vacation properties. Seasonal or remote access cottages face tighter limits (75% uninsured, insurable only through Sagen). We model standard Type A properties.
• Provincial taxes and closing costs. Land transfer taxes, Quebec's welcome tax, legal fees, and inspections affect the cash you need, not the price you qualify for. They are planned for a future version.

We tested the engine against Pacaso's US second home calculator by configuring our engine with their assumptions: a 43% debt to income cap, no stress test, and no carrying costs on the new property. Under those assumptions our engine reproduces their published result to the dollar.

Then we ran the same borrower through Canadian rules. The result came in roughly 25% lower, and that gap is the point: the stress test and the new home's own carrying costs are real constraints Canadian lenders apply. A calculator that ignores them shows you a home you cannot finance. Ours would rather be right than flattering.

With the calculator's default inputs: $100,000 gross income, $1,500 monthly rent counted at 70%, a $2,340 current mortgage payment plus $300 tax and $120 heating, $500 of other debts, $50,000 down, 4% contract rate, stress test on:

• Usable income: $9,383 per month
• Debt allowance at 44% TDS: $4,129 per month
• Existing obligations: $3,260 per month
• Qualifying rate: 6.00% (4% + 2%)
• Result: about $147,000 maximum price with a $97,164 mortgage, limited by income

A sobering number, and deliberately so: carrying two homes on one income is exactly the situation the qualifying rules exist to test.

This calculator provides estimates based on industry standard qualifying rules. It is not financial, lending, or investment advice, and it is not a preapproval. Actual approvals depend on your credit profile, the property, and each lender's policies. Confirm your situation with a licensed mortgage professional.