Christopher Liew: How much income do you require to become a homeowner in Canada?

A real estate sign showing homes for sale is seen in Montreal on Monday, March 24, 2025. (Christinne Muschi/The Canadian Press)

Christopher Liew is a CFP®, CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.

An increasing number of people in their 20s and 30s are beginning to feel that homeownership is out of reach. Home prices remain high, mortgage rates are still elevated compared to a few years ago, and other daily living costs continue to squeeze household budgets.

Between all of these pressures, prospective home buyers are wondering how much income they need to realistically afford to buy their home. Aside from the affordability of the listing price itself, there are also a number of other factors to consider, including the shopper’s debt-to-income ratio, credit profile, and future life plans.

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Below, I’ll help explain how much you should be earning to afford a home and outline some other key considerations that you should keep in mind to help determine how much home you can afford.

How much does the average home cost?

There’s no single number that applies to everyone. However, the Canada Mortgage and Housing Corporation (CMHC) recommends that housing costs should generally stay below 30 per cent of your gross household income. That includes:

• your mortgage payment;
• property taxes;
• utility costs; and
• condo fees, homeowners’ association dues, and common area maintenance fees.

The Canadian Real Estate Association reports that it expects the average home price in Canada for 2026 to jump incrementally to $698,881.

Before even considering mortgage affordability, you’ll need to come up with the down payment for your home. If you’re a first-time home buyer eligible for a CMHC-backed mortgage, then you’ll only be required to put down 5 per cent of the first $500,000 and 10 per cent of the portion over $500,000.

How much you need to earn to afford the average home

Here’s some rough math to help you approximate how much you should be earning each month to afford the average home in Canada as a first-time home buyer.

For example, if you’re planning to purchase a $700,000 home, you’d need to have $45,000 saved to make your down payment. That comes from putting 5% down on the first $500,000 ($25,000) and 10% on the remaining $200,000 ($20,000).

Currently, around a quarter of the country is living paycheque to paycheque and many don’t even have $1,000 in emergency savings, let alone $45,000 to put down on a home. So, this is the first major hurdle you’ll face.

But the costs don’t stop at the down payment. Since you’re putting down less than 20 per cent, you’ll also be required to pay for CMHC mortgage default insurance. On a $655,000 mortgage, that premium would be roughly $26,200 (4 per cent of the mortgage amount), which gets added to your mortgage balance. That brings your total financed amount to approximately $681,200.

Most Canadian mortgages have an amortization period of 25 to 30 years, broken down into smaller three- or five-year mortgage contracts with rates that can vary between terms.

At a mortgage rate of 4.5 per cent, which is a reasonable estimate in today’s rate environment, your monthly mortgage payment on a $681,200 balance would be approximately $3,750 over 25 years or $3,450 over 30 years.

But your mortgage payment is only one piece of the puzzle. You also need to account for property taxes (approximately $300 to $400 per month), home insurance (approximately $100 to $150 per month), and utilities (approximately $200 to $300 per month).

That brings your total monthly housing costs to somewhere between $4,050 and $4,600.

For your housing costs to remain under the CMHC’s recommended 30 per cent of gross monthly income, you’d realistically need a gross household income of between $13,500 and $15,300 per month, or roughly $162,000 to $184,000 per year. That’s in addition to having $45,000 saved for a down payment, just to afford the average $700,000 home in Canada.

To put that in perspective, the median household income in Canada is well below that threshold, which helps explain why homeownership feels increasingly out of reach for so many Canadians.

Other factors that affect how much home you can afford

Income is only part of the bigger picture. Before approving a mortgage, lenders evaluate your entire financial profile. Small differences in credit, debt or location can dramatically change how much borrowing power you have.

Credit

Your credit score and borrowing history play a major role in determining your mortgage rate. A higher credit score signals reliability and can unlock better interest rates, which lowers your monthly payment and increases how much home you can realistically afford.

Even a small difference in your rate can add or subtract tens of thousands of dollars in long-term interest costs over the amortization period of the home. Missed payments, high credit utilization or a limited credit history can limit your options and cause you to have a higher interest rate.

Home location

Home location matters a lot, but so does city selection. Two households earning the same income can have completely different home-buying experiences depending on whether they’re buying in a major city or a smaller market. Big cities typically come with higher home prices, property taxes, insurance costs and commuting expenses.

A home that looks affordable on paper can become much more expensive once you factor in higher insurance premiums, longer commutes (fuel, parking, vehicle wear and tear), and municipal taxes in premium urban areas. The city you choose often matters just as much as the house you buy.

Existing debt

Before approving a mortgage, lenders take a close look at your debt-to-income ratio. Student loans, car payments and credit card balances reduce how much room remains in your budget for housing. Even if you technically qualify based on income, carrying high monthly debt payments alongside a large mortgage can create financial strain, and cause lenders to deny approval for larger, more expensive homes.

Preparing to buy your first home

Before you start shopping for a house, it helps to be prepared. Take time to closely look at your monthly budget. Make a complete list of your total debts, your monthly payments towards those debts, your current living expenses, and the amount of money you have leftover after expenses.

As you begin looking at homes, make sure that you’re also researching average property taxes for the area you’re interested in, how far away from work the home is, and whether or not the home is in a region prone to severe weather that could drive up insurance costs.

Additionally, working with a skilled real estate agent or financial planner through the process of shopping for a home can help you financially prepare so you have more options available and are completely satisfied with the home you end up finalizing on.

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