What Size of a Mortgage can you Afford in Canada?
In real estate, affordability is your capacity to buy a property (maybe a particular house that you have your eye on), typically expressed as the maximum amount you will be able to pay.
You may be a first-time homebuyer, a homeowner looking to move to another house, or an investor looking to buy real estate for rental income opportunities. You may be hoping to buy a condominium, a townhome, a duplex, or a house. Whatever category you fall into, you need to know what size of a mortgage you can afford.
In this article, we provide information, a tool, and a resource to help you find the maximum home purchase price you can afford in Canada.
What is Mortgage Affordability and Why is it Important?
Mortgage affordability is the maximum mortgage you can afford—based on your current income, living expenses, available down payment, and any debt payments or other financial commitments you may have.
Understanding mortgage affordability is important because it helps protect you from entering into a legally binding mortgage agreement and ending up with monthly mortgage payments you can’t afford, resulting in an unwanted default situation.
What Size of a Mortgage can You Afford in Canada?
To avoid an unexpected mortgage default scenario, you can use a mortgage affordability calculator—an easy and important first step to figuring out how much mortgage you can afford.
To find out how much mortgage you can afford in Canada, the Canada Mortgage and Housing Corporation (CMHC) offers a free affordability calculator that you can take advantage of—you will simply need to fill in your financial information, including income and monthly expenses.
If it is your first time buying a home, CMHC also acts as a trusted resource that takes you through the steps of what you need to know to buy a home in Canada.
Are Mortgage Affordability Calculators Accurate?
Mortgage affordability calculators are a great place to start; however, be mindful that these calculators are for illustrative purposes only. While every effort is made to keep the tool as accurate as possible, it cannot take account of every nuance of your financial situation.
It is advisable to confirm your mortgage affordability by consulting with a professional mortgage broker or lender before you take action. Then you can safely realize your real estate ambitions, whatever they might be.
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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.