How Much Home Can You Afford in 2026? Updated Affordability Guide

Understanding how much home you can afford is one of the most important steps in buying a property. In 2026, Canada’s housing and mortgage environment looks more stable than in recent years, but affordability remains a key concern—especially with higher borrowing costs than in the past. This updated guide breaks down what Canadian buyers need to know.

The 2026 Housing Affordability Landscape

By 2026, mortgage rates are expected to be steady rather than volatile. While this brings predictability, prices in many markets remain elevated. Affordability now depends more on income, debt levels, and budgeting discipline than on timing the market.

Buyers are increasingly focused on long-term sustainability rather than stretching to the maximum loan amount.

Key Factors That Determine How Much You Can Afford

1. Household Income

Lenders typically look at gross household income to determine affordability. Stable employment and consistent income history are crucial in 2026’s lending environment.

2. Debt-to-Income Ratios

Canada’s mortgage stress test remains a major factor. Lenders assess:

• Gross Debt Service (GDS)

• Total Debt Service (TDS)

Keeping debt levels low improves borrowing power.

3. Down Payment Size

A larger down payment reduces your mortgage amount and monthly payments. In 2026, many buyers are prioritizing savings to strengthen affordability and reduce interest costs.

4. Interest Rates and Mortgage Type

Whether you choose fixed or variable impacts affordability. Fixed rates offer payment certainty, while variable rates may offer flexibility if rates trend lower.

Using the Mortgage Stress Test in 2026

Buyers must still qualify at the higher of:

• The contract rate plus 2%, or

• The government’s minimum qualifying rate

This ensures borrowers can handle future rate increases and reinforces conservative affordability planning.

Budgeting Beyond the Mortgage

True affordability goes beyond monthly mortgage payments. Buyers should also budget for:

• Property taxes

• Utilities

• Maintenance and repairs

• Condo fees (if applicable)

• Closing costs

Ignoring these expenses can strain finances after purchase.

Tips to Increase Your Buying Power in 2026

To improve affordability:

• Pay down high-interest debt

• Improve your credit score

• Save for a larger down payment

• Choose a longer amortization where permitted

• Get pre-approved before house hunting

Final Thoughts

So, how much home can you afford in 2026? The answer depends on careful planning, realistic budgeting, and understanding how lenders assess risk. With stable rates and informed strategies, Canadian buyers can confidently determine a price range that supports long-term financial health.