—Based on your inputs, this is an estimate of the maximum mortgage you may qualify for with RBC.
Understanding Your RBC Mortgage Affordability
Calculating your mortgage affordability is a crucial first step in the home-buying process, especially when considering a lender like RBC. This calculator provides an estimate of the maximum mortgage amount you might be eligible for, helping you set a realistic budget for your new home. It's important to remember that this is an estimation, and your actual borrowing limit will be determined by RBC based on a full credit assessment and their specific lending criteria.
How the Calculation Works
The core of mortgage affordability calculation involves assessing your financial capacity to handle monthly payments, considering your income, debts, and the cost of the mortgage itself. While this calculator simplifies the process, a real-world assessment by RBC involves more detailed factors. The primary factors influencing your maximum mortgage amount are:
Gross Annual Income: Your total income before taxes. Lenders use this to determine your ability to service debt.
Down Payment: The amount of cash you contribute upfront. A larger down payment reduces the mortgage amount needed and may improve your borrowing power.
Interest Rate: The rate at which RBC will lend you the money. Higher rates mean higher monthly payments for the same loan amount.
Mortgage Term: The length of time over which the mortgage is repaid (e.g., 25 years). Longer terms generally result in lower monthly payments, but more interest paid overall.
Amortization Period: The total time it takes to pay off the mortgage. This can be longer than the mortgage term (e.g., a 5-year term with a 25-year amortization).
Existing Debts: Other financial obligations like car loans, student loans, and credit card payments. These reduce the amount of income available for mortgage payments.
Stress Test Rate: Canadian mortgage regulations require lenders to qualify borrowers at a rate higher than their contracted rate (the "stress test"). This calculator uses the provided interest rate for simplicity in estimating maximum affordability based on a common affordability metric (e.g., 30-35% of gross income for P&I, subject to stress test).
Key Affordability Metrics (Simplified)
RBC, like other lenders, will consider your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
GDS Ratio: (Principal + Interest + Property Taxes + Heating Costs) / Gross Annual Income. Typically should not exceed 32-35%.
TDS Ratio: (GDS + All Other Debt Payments) / Gross Annual Income. Typically should not exceed 40-42%.
This calculator uses a simplified approach, often estimating maximum mortgage based on a percentage of your income that can cover the estimated Principal and Interest (P&I) payment, while implicitly assuming manageable debt levels and property taxes. For a precise calculation, you must speak with an RBC mortgage specialist.
Using the RBC Mortgage Calculator
Enter the details for your potential home purchase:
Home Purchase Price: The total cost of the home you're considering.
Down Payment: The cash amount you plan to put down. Remember the minimum down payment rules in Canada (e.g., 5% for homes under $500k, 10% between $500k-$1M, 20% over $1M).
Annual Interest Rate: The estimated interest rate you might secure. Rates fluctuate, so use a realistic current rate.
Mortgage Loan Term: The duration of your mortgage contract (often 1-5 years before renewal).
Amortization Period: The total repayment schedule (e.g., 25 years).
Click "Calculate Affordability" to see an estimated maximum mortgage amount. Use the sliders for quick adjustments and to visualize how changes in rates or terms affect your borrowing capacity.
Disclaimer
This calculator is for estimation purposes only and is not a mortgage pre-approval or commitment from RBC. All mortgage applications are subject to RBC's lending criteria, credit approval, and verification of income and other financial information. Actual borrowing amounts may vary. Consult directly with an RBC mortgage professional for accurate information and personalized advice.
function updateSliderValue(inputId, sliderId, displayId) {
var slider = document.getElementById(sliderId);
var display = document.getElementById(displayId);
var input = document.getElementById(inputId);
if (slider && display && input) {
var value = parseFloat(slider.value);
input.value = value.toFixed(value % 1 === 0 ? 0 : 2); // Update number input
if (inputId === 'interestRate' || inputId === 'interestRateSlider') {
display.textContent = value.toFixed(2) + '%';
} else {
display.textContent = Math.round(value) + ' Years';
}
}
}
function calculateMortgage() {
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var amortizationPeriod = parseInt(document.getElementById("amortizationPeriod").value);
var maxMortgageElement = document.getElementById("maxMortgage");
// Clear previous results
maxMortgageElement.textContent = "–";
// Input validation
if (isNaN(homePrice) || homePrice <= 0) {
alert("Please enter a valid Home Purchase Price.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid Down Payment amount.");
return;
}
if (isNaN(interestRate) || interestRate <= 0) {
alert("Please enter a valid Annual Interest Rate.");
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
alert("Please enter a valid Mortgage Loan Term.");
return;
}
if (isNaN(amortizationPeriod) || amortizationPeriod homePrice) {
alert("Down payment cannot be greater than the home price.");
return;
}
// Constants for simplified calculation (based on common lending rules, e.g., ~35% GDS)
// This is a VERY simplified model. Real affordability depends on many more factors.
var maxGdsRatio = 0.35; // Assumed maximum Gross Debt Service ratio percentage of gross income
var assumedGrossIncome = 100000; // Placeholder – A real calculator would ask for income!
// For simplicity, we'll work backwards from a hypothetical maximum mortgage payment.
// A common simplified approach is to assume maximum P&I payment as a % of income.
// Let's assume the user can afford a max monthly P&I payment that equates to, say,
// 30-35% of a typical income, and we'll present the *mortgage amount* they can support for that payment.
// Convert annual rate to monthly rate
var monthlyInterestRate = (interestRate / 100) / 12;
// Calculate the maximum affordable monthly mortgage payment (P&I)
// This is a simplified assumption: Let's assume the user can afford monthly payments
// that, when considering the mortgage amount, fit within a typical affordability benchmark.
// A VERY common rule of thumb is that P+I should not exceed ~30-35% of gross income.
// Since we don't have income, we'll work backward from the mortgage amount itself.
// A more direct approach for this type of calculator is often to calculate the monthly payment
// FOR a given mortgage amount and term, and then state that the user must ensure this payment
// fits their budget. However, the prompt asks for "maximum mortgage affordability".
// Let's re-frame: Instead of asking for income and calculating max payment,
// we'll calculate the monthly payment for the *loan amount* ($homePrice – $downPayment)
// and *then* present the loan amount itself as the "maximum" they could potentially borrow IF
// their income supported the resulting payment. This is a limitation of not asking for income.
// Calculate the actual mortgage amount
var mortgageAmount = homePrice – downPayment;
// Calculate the monthly payment (P&I) using the mortgage payment formula:
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
// Where:
// M = Monthly Payment
// P = Principal Loan Amount
// i = Monthly Interest Rate
// n = Total Number of Payments (loanTermYears * 12)
var numberOfPayments = loanTerm * 12;
var monthlyPayment = 0;
if (monthlyInterestRate > 0) {
monthlyPayment = mortgageAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle zero interest rate case (rare for mortgages, but for completeness)
if (numberOfPayments > 0) {
monthlyPayment = mortgageAmount / numberOfPayments;
} else {
monthlyPayment = mortgageAmount; // If term is 0, pay it all now.
}
}
// Format the results
var formattedMortgageAmount = mortgageAmount.toLocaleString(undefined, { style: 'currency', currency: 'CAD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
var formattedMonthlyPayment = monthlyPayment.toLocaleString(undefined, { style: 'currency', currency: 'CAD', minimumFractionDigits: 2, maximumFractionDigits: 2 });
// Display the calculated mortgage amount.
// IMPORTANT CAVEAT: This calculator DOES NOT ask for income. Therefore, it cannot truly calculate
// "maximum affordability" in the sense of what a bank would approve. It calculates the LOAN AMOUNT
// based on the inputs provided. The user *must* ensure they can afford the monthly payment.
// To make this slightly more useful for "affordability", we'll present the loan amount AND the resulting payment,
// emphasizing that the payment must be affordable.
// We'll show the loan amount requested ($homePrice – $downPayment) as the "maximum" for the inputs given,
// but also show the monthly payment, strongly implying this is what needs to be affordable.
maxMortgageElement.innerHTML = `${formattedMortgageAmount}(Estimated Monthly Payment: ${formattedMonthlyPayment}/month)`;
// Update slider displays if they exist (in case the number input was changed directly)
updateSliderValue('interestRate', 'interestRateSlider', 'interestRateValue');
updateSliderValue('loanTerm', 'loanTermSlider', 'loanTermValue');
updateSliderValue('amortizationPeriod', 'amortizationPeriodSlider', 'amortizationPeriodValue');
}
// Initialize slider values on load
document.addEventListener("DOMContentLoaded", function() {
updateSliderValue('interestRate', 'interestRateSlider', 'interestRateValue');
updateSliderValue('loanTerm', 'loanTermSlider', 'loanTermValue');
updateSliderValue('amortizationPeriod', 'amortizationPeriodSlider', 'amortizationPeriodValue');
});