Downpayment / Income / Market Updates / Purchase / Qualifying / Rates & Terms

Which city can you afford to live in?

The average home price varies significantly between Canadian cities. I’ve picked 10 cities and have detailed how much you need to earn annually to qualify for the purchase of an average priced property in that location. As the values are so different, the figures below will also provide you with a good idea of how much income you need to qualify at the different home prices. 

The figures below are based on minimum required downpayment and include the high-ratio insurance premium* with the exception of Vancouver as maximum “insured” purchase price cannot be higher than 1 million. I have also included the income required if you have $1000 monthly due in debt payments. If you are carrying personal debt amount, you are similar to over 40% of Canadians.

1. Vancouver, BC

Average home price: $1,093, 267

Income required: $160,000/ year

Income required with $1000/m debt payments: $160,000/ year

2. Toronto, ON

Average home price: $688,181

Income required: $115,000/ year

Income required with $1000/m debt payments: $135,000/ year

3. Calgary, AB

Average home price: $455,220

Income required: $92,540/ year

Income required with $1000/m debt payments: $104,032/ year

4. Edmonton, AB

Average home price: $379,524

Income required: $77,776/ year

Income required with $1000/m debt payments: $92,220/ year

5. Ottawa, ON

Average home price: $368,798

Income required: $75,684/ year

Income required with $1000/m debt payments: $90,547/ year

6. Saskatoon, SK

Average home price: $336,425

Income required: $69,370/ year

Income required with $1000/m debt payments: $85,496/ year

7. Regina, SK

Average home price: $307,609

Income required: $63,749 year

Income required with $1000/m debt payments: $80,999/ year

8. Winnipeg, MB

Average home price: $267,692

Income required: $57,370/ year

Income required with $1000/m debt payments: $75,896/ year

9. Nova Scotia (Not a city, but still fun to know)

Average home price: $223,520

Income required: $47,348/ year

Income required with $1000/m debt payments: $67,878/ year

10. Fredericton, NB

Average home price: $177,441

Income required: $38,360/ year

Income required with $1000/m debt payments: $60,688/ year

As you can see from the figures above, the $1000 monthly debt payments do not affect your qualifying power if you have a high annual income. The amount of consumer debt you carry is important as it factors into your “gross” debt-servicing ratios. Your ratio cannot be higher than 40%-44% of your gross income depending on your credit score and the product you are applying under; so the higher your debt payments, the less room left for mortgage payments. If you have a choice between paying off personal debt or having a higher downpayment, I suggest paying down debt to qualify for a higher mortgage amount.

If you’re borrowing your 5% minimum downpayment or utilizing a purchase plus improvement product, the qualifying income minimum will be higher. As there are multiple ways to structure an application for mortgage approval, working with an experienced financing professional is vital and can increase your chances of a positive response. If you’re not getting the answer you would like or it’s taking more than 72 hours to get a response of some sort, don’t be afraid to seek out a second opinion.

*Average house price figures are for March 2016, sourced from crea.ca. Insurance premium added is 3.6% of the “net” mortgage amount, annual property taxes are estimated at 1% of the purchase price, 25 year amortization with the exception of Vancouver where it is a 30 year amortization, 2.50% 5-yr fixed rate used to qualify.

For all your mortgage needs, contact Jackie at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca.

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