How Much Home Can You Buy?
The maximum home price that you can afford depends on a number of factors, but the most important are your gross household income, your down payment and the mortgage interest rate. This table gives you an idea of the maximum home price you can afford.
| Household Income |
5% Down Payment |
Maximum Home Price |
10% Down Payment |
Maximum Home Price |
25% Down Payment |
Maximum Home Price |
| $25,000 | $3,000 | $60,000 | $6,300 | $63,000 | $18,900 | $75,600 |
| $30,000 | $3,900 | $78,000 | $8,200 | $82,000 | $24,700 | $98,800 |
| $35,000 | $4,800 | $96,000 | $10,100 | $101,000 | $30,300 | $121,200 |
| $40,000 | $5,700 | $114,000 | $12,000 | $120,000 | $36,000 | $144,000 |
| $45,000 | $6,600 | $132,000 | $13,900 | $139,000 | $41,700 | $166,800 |
| $50,000 | $7,500 | $150,000 | $15,800 | $158,000 | $47,400 | $189,600 |
| $60,000 | $9,300 | $186,000 | $19,600 | $196,000 | $58,800 | $235,200 |
| $70,000 | $11,050 | $221,000 | $23,400 | $234,000 | $70,100 | $280,400 |
| $80,000 | $12,500 | $250,000 | $27,200 | $272,000 | $81,500 | $326,000 |
| $90,000 | $14,400 | $288,000 | $31,000 | $310,000 | $92,800 | $371,200 |
| $100,000 | $16,275 | $325,500 | $34,800 | $348,000 | $104,300 | $417,200 |
| Figures are rounded to the nearest $100. | ||||||
The above table assumes a mortgage interest rate of 5%; average tax and heating costs in Canada; and the mortgage an average Canadian would qualify for based on a 32% debt/service ratio.
For most people the hardest part of buying a home, especially the first one, is saving the necessary down payment. Many people will not have 25% of the purchase price to put down. With mortgage loan insurance, you can purchase a home with a minimum down payment of 5%. Mortgage loan insurance protects the lender and, by law, most Canadian lending institutions require it. The way it works is if the borrower defaults (fails to pay) on the mortgage, the lender is paid back by the insurer. The cost for this type of insurance is in the form of a premium and can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.
Most mortgage loan insurance products require homebuyers to provide the down payment from their own resources, such as savings and RRSPs. Gift down payments from immediate relatives are also acceptable. For down payments of less then 10%, CMHC enables lenders to offer homebuyers the flexibility to use additional sources of down payment such as borrowed funds or lender incentives.
| Financing Required | Premium % of Loan Amount |
| Up to and including 65% | 0.50 |
| Up to and including 75% | 0.65 |
| Up to and including 80% | 1.00 |
| Up to and including 85% | 1.75 |
| Up to and including 90% | 2.00 |
| Up to and including 95% Traditional Down Payment | 2.75 |
| Extended Amortization Surcharge | 0.20 |
| Non-traditional Down Payment | 2.90 |
Get a Mortgage Pre-Approval
Once you’ve made the necessary calculations and feel that you are ready to obtain a mortgage, it’s a good idea to get pre-approved. This means that we will look at your finances to establish the amount of mortgage you can afford. At that time, we will give you a written confirmation or certificate for a fixed interest rate good for a specific period of time.
Some buyers may not wish to pursue a mortgage pre-approval until they have found the home they want to buy. However, having a pre-approved mortgage amount makes the search for your new home much easier and less timeconsuming because you have a good price range in mind.
When you come to meet with us about your mortgage, you will need to bring:
- Your personal information, including identification such as your driver’s license;
- Details on your job, including confirmation of salary in the form of a letter from your employer or paystubs;
- Your sources of income and tax returns for 3 years;
- Information and details on all bank accounts, loans and other debts;
- Proof of financial assets (term deposits, investments etc.);
- Source and amount of down payment and deposit; and
- Proof of source of funds for the closing costs (these are usually between 1.5% and 4% of the purchase price).
