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Home / Mortgages / First-time Home Buyer / How Much Mortgage Can I Afford?
How Much Mortgage Can I Afford?
Learn about home ownership and determine how much you may be able to afford with our online mortgage pre-approval.
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What Can You Afford?
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Your Credit Rating
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Other Costs to Consider
How much home can you afford?
Buying a home is an exciting moment as well as one of life's biggest investments. Before you start searching for your home, it’s important to consider how much you can take on. You’ll need to understand how your lifestyle and other costs can affect how much mortgage you can afford.
What could my purchase price be?
Determine your mortgage affordability range and see how much you can borrow based on factors including income, debt, monthly expenses, lifestyle, savings, your credit score and more.
What is a credit rating?
Your credit rating is a ranking that indicates your financial health at a specific point in time. It compares the risk you pose for lenders to that of other Canadians.
Your overall credit rating is an important factor in determining the type and amount of credit you may be eligible to receive at any given time. That's why it's so important to establish and maintain the highest rating possible.
Credit agencies collect credit information from the companies that provide the credit to you. A strong credit record enhances your ability to get credit in the future. Records containing negative reports, such as overdue payments or non-payments, could make it more difficult for you to borrow or get credit in the future.
How to find your credit rating
It's good to be prepared and know your credit rating, especially before you apply for a TD Mortgage or TD Home Equity FlexLine. To find out how to obtain a copy of your credit bureau report, you may contact the credit bureau agencies directly: Equifax or TransUnion
How to improve your credit rating
Your credit rating can change over time, and it's a number you can improve with timely payment practices. If your credit rating is low, try to improve your credit rating before you apply. Here's how to manage your credit rating:
- Having a balance too close to your limit can decrease your credit score. Keeping your overall usage low by paying down your balance even if it’s only the minimum amount.
- Carrying high credit card balances can decrease your credit score. Keeping your balances low by paying down or consolidating your credit cards will improve your credit score.
- Making at least the minimum payment on time is important to maintain or improve your credit score. It's a good idea to set up automatic payments to make sure you are never late.
- Maintain a mix of credit, such as a credit cards, an auto loan, and a line of credit. Responsible use of credit cards and loans will produce a better credit rating than no history at all.
New to Canada?
As you settle into your new life in Canada, it’s important to pick a bank that can help you build a solid financial foundation. One of the biggest financial decisions you will make when putting roots down in your new country is the purchase of a first home
Even if you have no credit history1, you may qualify for a TD Mortgage or TD Home Equity FlexLine if:
- You are a permanent resident or have applied to become a permanent resident in Canada
- And you have been in Canada for 5 years or less
Planning for other costs
In all the excitement of searching for a home, it's easy to overlook the many extra costs involved in the purchase and beyond. Before you make an offer, it's important to be prepared for these home ownership costs. Here's a handy list to keep in mind.
One-time costs
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Deposit:
This is part of your down payment paid when you make an offer. Whatever the amount, make sure you're comfortable with it and able to provide it quickly.
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Down Payment:
Plan for an amount of at least 20% of the purchase price. If that doesn't fit your finances, a high-ratio mortgage may be available with a down payment of at least 5%.
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Appraisal Fee:
In order to get approved for a mortgage loan, you may be required to have the property valued. The process of determining the value of property is usually for lending purposes. This value may or may not be the same as the purchase price of the home. There may be a fee associated with an appraisal.
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Home Inspection:
This is a report on the condition of the home, and receiving a satisfactory one is often an important condition of the offer to purchase, as it can reveal any defects or requirements for major repairs.
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Legal Fees:
These are paid to your lawyer or notary for the legal transactions involved in the purchase, such as a review of terms of the offer, property title search, completion of mortgage documents, and registration of relevant closing documents.
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Land Transfer Tax:
This is a provincial tax that some provinces may charge to be paid on closing. The cost is a percentage of the property's purchase price and varies by province.
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Property Taxes and Utility Adjustment:
Some expenses that the seller may have prepaid on the property may need to be reimbursed by you before the sale is finalized. These may include municipal property tax, utilities such as heating, hydro and water, or condo maintenance fees if applicable.
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GST/HST where applicable:
This is sometimes included in the sale price and varies by province. Generally, these taxes are charged on new homes, not on resale properties. It's good to ask before making an offer.
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Interest Adjustment Payment:
This amount covers any interest accrued between the closing date of the purchase to the start of the term which is the first of the month following if you are at TD.
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Mortgage Default Insurance 5% Down Payment Option:
If you are unable to manage a large down payment, you can still enjoy home ownership with an insured mortgage.
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Home Insurance:
This is required to protect your home and its contents, and for the security of the mortgage loan. It must be in place on closing day.
After you close
Once you're ready for the big move, here are other costs to consider:
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Moving expenses
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Property taxes
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Utilities such as heating, electricity and cable, with potential deposits and service connection fees.
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Repairs or renovations, depending on the condition of your new home.
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Condominium fees or homeowner's association fees if applicable.