Our mortgage pre-approval calculator is a great tool (if I say so myself) to give you an idea about how much mortgage you will qualify for. When I meet clients, this is one of the first questions they ask me.
A mortgage pre-approval calculator will let you know approximately how much mortgage you can qualify for based on your income. From the mortgage amount, you can then calculate how much purchase price you qualify for depending on your down payment. Try our calculator below.
I want to mention one thing here. This calculator does not take into consideration how much debt that you may or may not have. If you have debt including credit cards with outstanding balances, loans, car loans, car leases or lines of credit, the mortgage you qualify for may be different.
If you want to get an official pre-approval to know exactly how much mortgage you will qualify for, then complete your personal details in the middle. We will connect with you to review and give you an official number.
This mortgage pre-approval calculator above will provide you with a number and a fairly accurate guess based on your income. However, this shouldn't be used to make a buying decision.
It's important to have a mortgage broker review your income documents, to look at your credit bureau and review your other monthly obligations. An official pre-approval will include a credit check and document review.
How To Use The Mortgage Pre-Approval Calculator?
The first and most important field to input is our mortgage pre-approval calculator is your income. If you are single, use your income. If you are a couple purchasing together then add your incomes together and input in this field.
Let me explain how to calculate your income (the way a lender would consider it). Scroll through here to see which applies to you...
Salaried Employee: If you are a salaried employee, then you would input your annual salaried income before income tax is paid.
Let's say your salary is $6,000 per month. Then you would input $72,000 into the calculator.
Salaried plus bonuses: If you earn salary plus bonuses, then you have 2 options. You can just input your salary and not include your bonuses.
To include your bonus income, you must be with the same employer for at least 2 years. To include bonus income, a lender will use a 2 year average of your income. This average would be based on your T4 income or your Income Tax Return Notice of Assessments (line 150 average over the last 2 years)
Hourly Employees: If you are an hourly employee, then to calculate your annual income you would include your hourly rate and weekly guaranteed hours.
Let's say your earn $25/hour. You are guaranteed 37.5hours per week. In this case, you would multiply $25/hour by 37.5hours per week and then multiply by 52 weeks. $25 x $37.5 x 52 equals $48,750 per year.
You would input $48,750 into the mortgage pre-approval calculator.
The maximum hours a lender will use in this calculation is 40 hours per week. If you are guaranteed 44 hours per week, then use 40 hours in your calculation.
If you want to include additional hours, then a 2 year average would be needed. A 2 year average is calculated by taking your T4 income or Income Tax Notice of Assessment (line 150) income for the most recent 2 years.
Hourly plus overtime: If you earn overtime and want to include this in your calculation, then you want to calculate your last 2 year average.
Let's assume that you earned $65,500 last year and $62,000 the year before. The 2 year average is $63,750. Input that number into the mortgage pre-approval calculator above.
Casual Employee: If you are a casual employee, then you won't have guaranteed hours. In this case, a lender will want a 2 year average of your income.
You must be with the same employer to calculate a number that is accurate. Like in the previous examples, a 2 year average is calculated by taking your taxable income in the last 2 years and averaging these together.
Part-time Employee (or 2 jobs): If you are a part-time employee, that is you are guaranteed less than 30 hours per week. Or, if you have 2 part-time jobs, then you can still qualify for a mortgage. Lenders will want to take a 2 year average of your income to calculate how much you qualify for.
Like the calculation for casual employees, you must be in both jobs for at least 2 years. You will then average your T4 income or your Notice of Assessment Income over the last 2 years. Input this number into the mortgage pre-approval calculator.
Self-Employed (or Contract Employee): If you are self employed or you are a contract employee, where your employer does not take source deductions, they lenders will use a 2 year average of your income.
This mortgage pre-approval calculator is designed to give you a number based on your documented taxable income. As a self employed individual there are programs and mortgage options available to you that aren't available to employees.
If you want more details about these, read this article that we wrote regarding self employed mortgage options.
To calculate your average income, use the last 2 years of your income tax returns or Notice of Assessments. Lenders use line 150 when they average your income.
There are other options, but in my opinion, if you are self-employed connect with us or a mortgage broker. We can help you to explore all your options. Complete your personal details in the middle of the calculator and we can connect.
What Down Payment Should I Input in the Mortgage Pre-Approval Calculator?
If you aren't sure about how much mortgage you qualify for, then just choose 5%. Once you see the result, then you can change the amount and the resulting purchase price will change.
The calculator will first calculate how much mortgage you qualify for. Then based on this number and your down payment chosen, you will see how much purchase price you can make that won't exceed the mortgage approved.
As you review the results on the right side, you can see that the Default Insurance Premium is also included. When your down payment increases from 5% to 10%, the default insurance premium goes down. Therefore with a bigger down payment and lower mortgage insurance premium, your purchase price goes up.
What Interest Rate Should I Input into the Mortgage Pre-Approval Calculator?
The interest rates vary from day to day. They also vary based on the down payment you provide. Many lenders also offer different rates based on the other criteria. Therefore, we do not provide accurate current rates here.
If you want to know current rates, completed your contact details in the middle section and we can review programs, rate promotions and other options available to you.
What Mortgage Term Should I Input in the Mortgage Pre-Approval Calculator?
The term is there to allow you to see how much your mortgage balance would be after 1 to 5 years. Most people choose a 5 year term, but you can choose any term.
If you are interest in knowing how much principle you have paid off after 1 year, or 2 years, etc., then change the term to 1 or 2 years, etc. and see the result at the bottom right of the calculator results.
A principle and interest payment and total housing costs is important to know so that you can do some budgeting.
It's also nice to know how quickly (or slowly) your mortgage is being paid down based on these payments.
What Amortization Should I Input into the Calculator?
The calculator allows you to choose an amortization from 5 years to 25 years. Lenders will qualify you for a mortgage based on 25 years unless you have 20% down or more.
For the purposes of this calculator, the maximum amortization you can choose is 25 years.
If you have 20% down or more and want to know how much you qualify for based on a 30 year amortization, then complete the contact details in the middle of the calculator. We can connect and review your numbers.
What Property Tax Amount Should I Input into this Mortgage Pre-Approval Calculator?
The property tax owing for any property will be based on the municipality where you live. If you are unsure of the amount to include, then leave it at $1,000 for your first calculation.
Once you see the purchase price, that you could potentially qualify for, then change the property tax to 1% of that amount.
Every city is different, if a lender doesn't know what the property taxes will be, then they will assume 1% of the purchase price. That's a fair number to use for these purposes.
What Condo Fee should I input into the Calculator?
If you aren't purchasing a condo, then leave this at zero.
If you will be purchasing a condo, then you could give an estimate based on the type of property you are interest in buying...
Townhouse Style Condo: I would use $150 to $200 per month as an estimate for this type of property
Apartment Style Condo: I would use $300 to $400 per month as an estimate for this type of property.
These are just estimates, until and unless you have narrowed down your search, these numbers will work for now.
What should I input for the Credit Card & LOC Balances Section of the Mortgage Pre-Approval Calculator?
For this section of the calculator add up all outstanding balances that you keep on your credit cards or lines of credit each month.
If you use your credit cards and pay them off to zero each month, then type in "0". If you pay off your credit cards but keep a balance on your line of credit of $5,000 then add "5000" to this section.
The calculator will determine the minimum payment that you are required to make based on the balance that you input. The qualifying mortgage amount is then calculated based on all the input including your credit card and line of credit debt.
You will noticed that you can have a credit card balance without any effect on the approved mortgage amount. Once you increase the balance over a certain number, then qualifying mortgage amount decreases.
Play around with the numbers, it's fun to see how different revolving balances will change the results.
What should I input for the Total Monthly Loan & Lease Pmts of the Calculator?
For this section you should include the monthly payments that you make for any personal loans or vehicle loans or leases.
If you have a car lease that is $325 per month, then input "325".
If you have a personal loan with a payment of $275/month and a car loan (or lease) with a payment of 325/month, then add these two numbers together. $325 plus $275 equals $600, then input 600.
Sometimes you have loan or lease payments that are paid every 2 weeks, called bi-weekly. If you debt payment is bi-weekly, then you have to convert that payment to monthly.
To convert a bi-weekly payment to monthly you must multiply the bi-weekly payment by 26 and divide by 12.
Here is an example, you have a bi-weekly payment of $230. To convert this payment to monthly multiply by 26 and divide by 12. Therefore, $230 multiplied by 26 and divided by 12 equals $498.33. You could type in 498 or round up to 500.
Notice that a bi-weekly payment of $230 is not $460 per month. You can type in 460 if you wish, then look at the result. Then type in 500 and look at the result. Is it different?
Sometimes the payments will affect how much mortgage you can qualify for and sometimes they don't. This difference really depends on your income and the total amount of the payments that you must make each month.
Our mortgage pre-approval calculator is a tool that you can use to get an idea about how much you can qualify for. This is by no means an approval.
To be confident that you can shop for a home in a certain price range, then you should connect with use. We will review your credit report, review your income documents, find you the best mortgage available and let you know exactly how much you can qualify for.
If you have questions about how to qualify or what you specifically qualify for, connect with us by completing the calculator and your personal contact details.