What you can actually afford

Replace "what a lender will approve" with "what you're comfortable paying" — and see the gap.

The idea

There are two numbers in this week and they are not the same number. One is what a lender will approve you for. The other is what you can pay every month for twenty-five years without resenting your house. Most people only ever calculate the first one, and then spend a decade living inside it.

The ratios lenders use. Two of them. Gross Debt Service is the share of your gross monthly income that goes to housing — mortgage payment, property tax, heat, and half of any condo fee. Lenders generally want that at or under 39%. Total Debt Service adds everything else you owe monthly — car payment, student loans, credit card minimums, support payments — and typically needs to stay at or under 44%. That's it. That's the machinery. Individual lenders vary and some will stretch, but this is the shape of the test.

Two things worth saying plainly. These are limits, not targets — nobody has ever been congratulated for landing exactly on 44%. And they're calculated on gross income, before tax, which is not money you have ever actually held.

The stress test. This is the piece almost every guide skips, and it's the one that moves the number most. You do not qualify at the rate you're offered. You qualify at the higher of a set floor — currently 5.25% — or your contract rate plus 2%. So a mortgage you'd actually pay at one rate is assessed as though you were paying meaningfully more. The effect is to cut your maximum purchase price by a noticeable margin, and it's why people's own math and their lender's answer so often disagree. Better to meet it here than in a lender's office.

Your down payment sets your floor, not your ceiling. The minimum is 5% on the portion of the price up to $500,000, and 10% on the portion between that and $1.5 million. Above $1.5 million you need 20% and mortgage default insurance isn't available. Under 20% down, that insurance is mandatory — it protects the lender, not you, the premium scales with how little you put down, and it's normally added to the mortgage rather than paid in cash.

The all-in number, and where Padster's number stops. Every listing on this site shows an estimated monthly mortgage, and it's calculated at 10% down, 4.34% fixed, 25-year amortization, principal and interest only. That's principal and interest only. It does not include property tax, condo fees, home insurance, heat, or mortgage default insurance. Your real monthly cost is higher than the number on the card — sometimes several hundred dollars higher. We'd rather tell you that here than have you find out in Week 11. This week's worksheet builds the honest version.

The comfort ceiling. At the end you'll be asked the most important question in the course: what's the most you'd be happy paying every month? Not the most you could survive — the most you'd be content with, on an ordinary month, with a life still attached. That number is yours, it's usually well below the approval figure, and from here on it's the one this course uses.

Edmonton specifics

Property tax. Edmonton bills annually based on assessed value, and you can spread it over the year through the Property Tax Monthly Payment Plan rather than facing it as one January bill — automatic withdrawal on the first business day of each month, with no late-payment penalty. You can enrol at any time, though starting partway through a year means making up the instalments you've missed plus a small service fee. Either way it belongs in your monthly math from the start, because your lender counts it in your GDS whether you've thought about it or not.

Condo fees. These vary enormously between buildings, and — importantly — so does what they cover. Heat and water are often included, sometimes electricity, sometimes almost nothing beyond the exterior. A building with a $520 fee that covers heat and water may genuinely cost less to run than one at $380 that covers neither. Read what the fee buys before comparing two fees.

Fees also cost you purchase power directly: roughly speaking, every $100 of monthly condo fee is about $73,000 of mortgage you could otherwise have carried. That reframing is useful for deciding between a condo and a detached home, and Week 4 picks it up properly.

Heat. An Edmonton winter is a real line item, not a rounding error. A drafty older detached home and a well-insulated newer build can differ by a meaningful amount every month between November and March, and it never shows up on a listing. Ask the seller's agent what the home actually cost to heat last winter — on an older detached home the answer can move your comparison more than a $10,000 difference in price.

The worksheet

The affordability snapshot. Longest worksheet in the course, and the one everything downstream reads from. Fifteen minutes with your bank app open.

Income — everyone who'll be on the mortgage. - income_gross_1 / income_gross_2 — Annual income before tax. - income_other — Any other regular income? Only include what you could document for two years — a lender will ask. - income_type — How is it earned? Commission and self-employment aren't a problem, they're a paperwork difference. Week 3 covers it.

Debts — add a row for each. - label, monthly, balance, type — Every monthly payment you make toward debt. Skip a credit card you pay in full each month. Enter 0 if none. For cards and lines of credit you carry a balance on, the number that counts against you is not the minimum payment on your statement. On an insured mortgage, CMHC requires the lender to use no less than no less than 3% of the outstanding balance of the outstanding balance as a monthly payment. A $10,000 balance is treated as roughly $300 a month whatever your statement says, which is why a carried balance costs far more borrowing room than people expect. Paying one down before you apply moves your number more than almost anything else you can do in a week.

Housing costs - target_price — A price you have in mind? Leave blank and we'll solve for it. - down_payment_have — Saved so far, including FHSA, RRSP or TFSA you'd use. - property_tax_monthly — Leave blank to use an Edmonton median estimate. - condo_fee_monthly — Only if you're considering a condo or townhouse. - heat_monthly / insurance_monthly — Defaults provided; overwrite if you know. - comfort_ceiling — What's the most you'd be happy paying every month? Not the most you could manage. The most you'd be content with.

What you get back

Your GDS and TDS, each shown against the limit on a band — comfortable, tight, over. Your minimum down payment and, if you're under 20%, the default insurance premium. Your stress-tested maximum price, which is the one that counts. Your true all-in monthly cost beside the principal-and-interest figure you see on listing cards, so the difference is explicit.

And the number most buyers have never seen: the gap between what you'd be approved for and what you said you'd be comfortable with. For most people it's tens of thousands of dollars of purchase price. Nobody is going to point it out for you.

If a band comes back red: it tells you which lever moves it and by how much — pay down a specific debt, add to the down payment, or adjust the price. It is never a dead end, and the number changes faster than most people expect.

What this unlocks

The main event of the first month: a search filtered to your comfort ceiling, with a live count of the Edmonton homes currently inside it. Not a hypothetical — actual listings, today.

Your comfort ceiling is saved and reused in Weeks 5, 7 and 8. When you're standing in a kitchen in Week 6 doing quiet math, this is the number the course will hold you to.

Talk to a professional

You've just done a lender's arithmetic with your own numbers. A mortgage broker or lender will do it properly, with documents, and can tell you where your particular situation bends the rules — self-employment, commission income, a gift, or a thin credit file.

Worth doing now if the ratios came back tight, or if your income isn't a simple salary. Week 3 covers what to bring and what to ask.

Go deeper: read the full article on this →

The information in this course is general education, not financial, mortgage, legal, tax, insurance or real estate advice. Rules, costs and eligibility change and vary by situation. Talk to a qualified professional about your own circumstances.