Meera and Dan bought a semi in Hamilton six years ago. There were two of them then. There are four now, and a detached house with a proper backyard has started to feel less like a wish and more like a logistics problem.
The question they keep circling is the one most move-up buyers ask: if we sell this house, how much house can we buy? It sounds like it should be simple. Sale price, less the mortgage, equals down payment. In practice there are half a dozen deductions between the sale and the down payment, and then a second limit, income, that has nothing to do with equity at all.
Here's their situation run through our move-up calculator, step by step.
Where they're starting
They expect their semi to sell for about $850,000. They owe $430,000 on a five-year fixed at 3.89%, with 20 months left in the term and about 22 years of amortization, paying around $2,419 a month. Their household income is $170,000 before tax, and they have a car payment of $450 a month.
For the new mortgage we'll use 4.29% over 25 years, property tax of about 1% of the price a year, and $120 a month for heating. Those are assumptions; you'd put in your own.
The waterfall: from sale price to down payment
The sale comes first, and everything else pours out of it.
| Estimated | If they break the mortgage |
|---|---|
| Sale price | $850,000 |
| Mortgage paid off | −$430,000 |
| Prepayment penalty | −$4,148 |
| Realtor commission, 5% with HST | −$42,500 |
| Legal fees on the sale | −$1,500 |
| Cash from the sale | $371,852 |
Then the purchase takes its share before a dollar reaches the down payment. On a $1,000,000 house in Hamilton, the Ontario land transfer tax is an estimated $16,475, and legal fees, title insurance, an inspection and adjustments might add about $2,500. That leaves roughly $352,877 for the down payment, about 35% of the price, and a new mortgage of about $647,123.
Land transfer tax grows with the price, and in Toronto a municipal tax roughly doubles it. Our post on Ontario land transfer tax walks through the brackets.
Porting or breaking
That $4,148 penalty is three months' interest on their balance. Because their 3.89% is below today's 4.29%, a rate-gap penalty would be small, so three months' interest is the likely charge. A big bank that measures against its posted rates could charge more, and the break calculator gives a fuller estimate you can enter instead.
The alternative is to port: take the existing mortgage with them to the new house. Porting usually avoids the penalty, and the $430,000 they carry over keeps its 3.89% for the rest of the term. The extra borrowing is at today's rate, and the two are blended.
For Meera and Dan the difference shows up in two places. The cash from the sale rises to $376,000, because there's no penalty. And the blended rate on a $1,000,000 purchase comes out at about 4.02% instead of 4.29%, so the payment is about $3,390 a month rather than $3,506.
Porting has its own rules, and they're set by each lender. The sale and purchase often have to close within a set window of each other. The ported mortgage keeps its remaining term, 20 months in this case, so the whole thing comes up for renewal sooner than a fresh five-year term would. And if the new mortgage were smaller than the old one, a penalty could apply to the part not carried over. You may wish to confirm your lender's porting terms before listing, since they can shape the timing of everything else.
The second limit: income and the stress test
Equity sets how much they can put down. Income sets how much they can borrow, and it's usually the tighter of the two for a household moving up.
Lenders qualify a new mortgage at the greater of the contract rate plus two points or 5.25%. At 4.29%, that's 6.29%. They then compare the stress-tested payment with gross income using two ratios. Gross debt service (GDS) is the payment plus property tax, heating and half of any condo fees, and the usual limit is 39% of income. Total debt service (TDS) adds other debts, like the car payment, with a limit of 44%.
On a $1,000,000 house with the mortgage broken, Meera and Dan come out at an estimated GDS of 36.7% and TDS of 39.9%, within both limits. The detached houses they've been looking at are closer to $1,100,000, though. At that price the mortgage would be about $749,123, the GDS rises to 42.1% and the TDS to 45.2%. Both over. The scenario suggests their income supports a mortgage of about $683,000 at that price, so they'd be about $66,000 short. They'd have more than enough cash; it's the monthly test that stops them.
So how much house?
The calculator solves for the highest price where every rule is met at once, because land transfer tax, property tax and the minimum down payment all rise with the price.
| Estimated | Break | Port |
|---|---|---|
| Cash from the sale | $371,852 | $376,000 |
| Highest price the scenario covers | $1,042,000 | $1,059,000 |
| If the rate were half a point higher | $1,015,000 | $1,049,000 |
| Payment at that highest price | $3,739 | $3,716 |
| What sets the limit | income | income |
Porting adds about $17,000 of room, partly from the penalty they don't pay and partly because the blended rate is tested lower. The half-point row is worth looking at: rates can be different by the time an offer is accepted, and it shows how much the answer moves.
At $1,100,000 in the port column, they'd still be about $47,000 short on income. The houses they've been admiring sit just past what this scenario covers. That's a useful thing to learn before the first open house rather than after it. It may be worth exploring a slightly lower price range, a second income source that a lender would count, or paying off the car loan first, which lowers the TDS.
The $1.5 million line
Meera and Dan aren't near it, but many Ontario move-up buyers are.
A purchase with less than 20% down needs mortgage insurance, and insurance is available only on homes priced below $1.5 million, a cap raised from $1 million in December 2024 according to CMHC and the Department of Finance. Below the line, the minimum down payment is 5% of the first $500,000 and 10% of the rest. At the line or above, it's 20% of the whole price.
That makes the step sharp. On a $1,499,000 home the minimum down payment is $124,900. On a $1,500,000 home it's $300,000. A household with, say, $200,000 of cash after the sale can buy just below the line and can't buy at it, whatever its income.
Insured mortgages bring two other costs. The premium, from 2.8% to 4% of the loan with less than 20% down, is added to the mortgage. And in Ontario, 8% sales tax on that premium is paid in cash at closing, which comes out of the down payment. The calculator handles both.
Taking it further
The move-up calculator runs this whole waterfall with your own figures, side by side for porting and breaking, and shows which rule stops the price going higher. It runs in your browser and nothing you type is sent to us.
It's an estimate, not a pre-approval. A lender will look at credit, how income is earned and documented, the property and its own policies, and the answer can differ in either direction. A licensed broker can compare lenders' porting rules and give you a pre-approval with a rate hold, and you can book a free conversation if that's useful. For a wider look at the mortgage you have now, there's the check-up, and the rest of the tools are on the calculators page.
Meera and Dan are an illustrative composite. All figures are estimates from the move-up calculator's engine, using rules reviewed in September 2026: the stress test from OSFI and CMHC, GDS and TDS limits and the $1.5 million insured cap from CMHC, and land transfer tax from Ontario's published brackets. Your lender's figures will differ. This is general information, not advice about your situation, and nothing here is a recommendation.