A Complete Mortgage Guide for Toronto & GTA Buyers
Introduction: Don’t Let Debt Kill Your Homeownership Dream
One of the most common questions I hear as a Mortgage Agent in Ontario is:
“Can I buy a home if I have student loans or car payments?”
With Toronto & GTA home prices remaining high, buyers often assume existing debt disqualifies them. That’s not true. What matters is how your debt fits into mortgage lending rules.
This guide breaks it down in simple terms—and shows how you can still qualify.
How Lenders in Ontario Look at Your Debt
Mortgage lenders don’t automatically reject you for having debt. Instead, they evaluate how manageable your debt is relative to your income.
The Two Key Ratios That Matter
1. Gross Debt Service (GDS)
GDS measures how much of your income goes toward:
Mortgage payment
Property taxes
Heating costs
50% of condo fees (if applicable)
Most lenders prefer GDS under 39%.
2. Total Debt Service (TDS)
TDS includes everything in GDS plus:
Student loans
Car loans or leases
Credit card payments
Lines of credit
Most lenders cap TDS at 44%.
👉 Learn more in my detailed guide on Mortgage pre-approval process in Ontario
Can I Buy a Home with Student Loans in Ontario?
Yes—student loans are very common among first-time buyers.
How Student Loans Are Calculated
Lenders look at your monthly payment, not the total balance
Government student loans are often treated more favorably
If payments are low, the impact on approval is minimal
Pro Tip for Toronto Buyers
If your student loan is:
In good standing
On a fixed repayment plan
Paid on time
…it usually does NOT stop you from qualifying.
📌 External Authority:
Government student loan repayment rules
(Canada Student Loans – Government of Canada)
What About Car Loans or Leases?
Car payments affect mortgages more than student loans because they’re usually higher monthly obligations.
How Car Payments Impact Mortgage Approval
Monthly payment is fully counted in TDS
Leases are treated the same as loans
A high car payment can reduce your buying power significantly
Example (Toronto & GTA Context)
Monthly income: $8,000
Car payment: $650
Student loan: $250
That’s $900/month already working against your mortgage qualification.
👉 This is why planning matters.
How Much House Can You Afford with Existing Debt?
There’s no one-size-fits-all answer—but here’s a general guideline for Ontario buyers:
You can still buy a home if:
Your income comfortably supports debt ratios
You have good credit (680+ preferred)
You have stable employment
Your down payment meets minimum requirements
Use a professional review instead of online calculators.
👉 Start here: Mortgage Affordability Calculator
Smart Strategies to Qualify with Student Loans or Car Payments
1. Pay Down High-Interest Debt First
Credit cards hurt more than student loans.
2. Reduce or Eliminate Car Payments
Pay off the balance
Switch to a lower payment
Delay a new vehicle purchase before buying a home
3. Increase Your Down Payment
A higher down payment can:
Improve approval chances
Access better rates
Reduce monthly mortgage payments
👉 See available programs:
First- Time Home Buyer Programs in Ontario
Toronto & GTA Buyers: Why Local Advice Matters
Toronto lenders often apply stricter stress testing, especially for condos and high-ratio mortgages.
A local mortgage agent can:
Access multiple lenders (banks + non-banks)
Structure your file strategically
Suggest timing improvements (3–6 months can make a big difference)
👉 Learn how I help clients restructure debt before buying:
Common Questions (FAQ)
Will lenders deny me just because I have student loans?
No. Most buyers in Ontario have some form of debt.
Should I pay off my student loan before buying?
Not always. Sometimes keeping cash for a down payment is smarter.
Can I qualify with both car payments and student loans?
Yes—if your income supports it and ratios stay within limits.
Final Thoughts: Debt Doesn’t Disqualify You—Poor Planning Does
Having student loans or car payments does not mean you can’t buy a home in Ontario. It simply means your mortgage needs to be structured properly.
With the right strategy, many Toronto & GTA buyers successfully purchase homes every year—even with existing debt.
If you want a clear, honest assessment, speak with a mortgage professional who understands Ontario lending inside out.
