Maximum Purchase Price Calculator

What the Maximum Purchase Price Calculator does

Most affordability tools start from your income. This one starts where house-hunting usually starts — with a sum of money in the bank — and finds the highest price that money and your income can jointly support.

The difference that matters is what it does with closing costs. Land transfer tax, legal fees and title insurance are due in cash and cannot be added to the mortgage, and they come out of the same account as your down payment rather than from somewhere else. This calculator sets them aside first, so the number it gives you is one you could actually complete a purchase at.

• Your ceiling, with closing costs taken out of your cash before anything is solved
• Which constraint is actually binding — the cash or the income — and what that means
• A comfortable ceiling alongside the maximum, with both ratios eased, not just one
• What the closing-cost reserve costs you in purchase price, stated plainly
• Four levers priced in dollars, including which ones are capped and why

Two ceilings, and only one of them is about income

There are two independent limits here and your real ceiling is the lower of them. Your cash sets one, through the tiered minimum down payment: 5% on the first $500,000, 10% from there to $1.5 million, and 20% above that, where insurance is unavailable. This limit does not move however much you earn.

Your income sets the other, through the debt service ratios — and those are run at the stress-tested rate, the greater of your contract rate plus two points and the 5.25% floor, not the rate you would actually pay. This limit does not move however much you have saved.

Knowing which one binds tells you what to do next, and the two answers point in opposite directions. If your cash is the constraint, saving more raises your ceiling and a raise does nothing. If your income is the constraint, the reverse. The page names it rather than leaving you to work it out.

• Cash sets a ceiling through the tiered minimum down payment rule
• Income sets a ceiling through GDS and TDS at the stress-tested rate
• Your real maximum is the lower of the two, always
• The binding one tells you which lever is worth pulling
• Pulling the other lever changes nothing at all

Why closing costs come out of your down payment

A mortgage can absorb the CMHC premium. It cannot absorb your land transfer tax, your lawyer, your title insurance or your home inspection. Those are cash, due on or before closing day, and for almost every buyer they come from the same savings the down payment comes from.

So a buyer with $120,000 does not have $120,000 for a down payment. They have $120,000 minus whatever closing costs turn out to be — and in Ontario, on a purchase in the high six figures, that is comfortably five figures. Reserving it first is the difference between a ceiling you can act on and one that falls apart at the lawyer's office.

That reserve is genuinely circular: the price sets the closing costs, the closing costs set the down payment, and the down payment sets the price. This page solves that loop properly rather than estimating once and moving on, which is why the amount it reserves and the amount it shows you are the same number.

• The insurance premium can be added to the mortgage; closing costs cannot
• They are funded from the same account as the down payment, not from elsewhere
• Land transfer tax is the largest of them, and Toronto charges it twice
• First-time-buyer rebates reduce the reserve and raise your ceiling
• The reserve is solved to a fixed point, so one figure appears throughout

Comfortable is not the same as approved

Lenders will let housing costs reach 39% of gross income and total debts 44%. Sitting at both limits is an approval, not a plan — it leaves nothing for the furnace, the assessment, the year the property tax jumps, or simply wanting to do something other than own a house.

The comfortable figure on this page eases both ratios together, to 32% and 36%. Easing only the housing ratio, as calculators generally do, quietly leaves the total-debt limit at 44% — and once monthly debts reach around $1,500 that limit binds both calculations and the comfortable price becomes identical to the maximum. The buyer most in need of the distinction is precisely the one who stops being shown it.

The gap between the two figures is the actual decision. Neither number is the right answer on its own; where you shop between them is a judgement about your own life that no calculator can make.

• A lender approves to 39% housing and 44% total debt
• Comfortable here means 32% and 36% — both eased, deliberately
• Easing only the housing ratio collapses the two figures for indebted buyers
• The gap is the decision; the maximum is only where the decision ends

What actually moves your ceiling

The levers table reruns the whole calculation with one thing changed, so every figure is in dollars of purchase price rather than in vague encouragement.

Some of what it shows is counter-intuitive. Another $10,000 of cash buys less than $10,000 of price, because a larger purchase carries larger closing costs and the reserve grows with it. Clearing $200 a month of debt can be worth almost nothing if you are simultaneously at the housing-cost limit — the room it frees has nowhere to go. The page says so when it happens, because a bare "+$494" with no explanation reads like a broken calculator rather than like two constraints binding at once.

A 30-year amortization is the largest single lever for most buyers, and it is also the one most often unavailable: with less than 20% down the mortgage must be insured, and 30-year insured amortizations are limited to first-time buyers and new builds. The page checks that before offering it.

• More cash raises the ceiling by less than the cash added
• Clearing debt does nothing if the housing ratio is already the constraint
• A longer amortization is the biggest lever, when you are eligible for it
• A co-applicant usually moves it most, assuming they bring no debt of their own
• Every figure is a full recalculation, not an approximation

Using your results well

Shop below the maximum. The gap between comfortable and maximum exists so you can choose a point in it deliberately rather than discovering the top of your range from a lender and treating it as a target.

Then check the assumptions that move the answer most. Property tax here is estimated from your city's mill rate applied to an assessed value that sits below market price — it is the softest input on the page and a high-tax property will lower your ceiling. If you are shopping condos, enter the fee: half of it counts against your ratios, and leaving it out overstates what you can spend.

And get a real pre-approval before you write an offer. This calculator does not know your credit score, how your income is documented, or the overlays a particular lender applies on top of the published rules. It gives you a number to shop under, which is a different thing from a number you have been approved for.

• Decide where between comfortable and maximum you actually want to be
• Enter the condo fee if you are shopping condos — omitting it inflates the ceiling
• Treat the property tax estimate as the softest figure on the page
• Confirm the closing-cost reserve against a real quote once you have a target price
• Get a pre-approval before making an offer anywhere near the top