Home Buying
Housing Ratio
Now that you have your monthly income, you can calculate your housing ratio. The housing ratio is the amount of your monthly income that goes to pay your housing payment. A housing ratio of 28% or less is considered ideal.
Multiply your monthly income by .28 (or 28%). That's the maximum amount a lender would generally say should go toward your total monthly housing expense.
In our example above, the lender would want to see a total monthly payment of no more than $606.48. ($2166 in monthly income x .28 = $606.48)
Keep in mind that monthly housing expense doesn't just include the loan payment. It should also include taxes and insurance, and condo fees if there are any. You can ask a real estate agent to estimate those costs for you in your price range.
To get more information on what you can afford and access to several calculators go to www.cmhc-schl.gc.ca. Here you will find the website for the Canada Mortgage and Housing Corporation.
| 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. | ||||||
This table assumes a mortgage interest rate of 8%, average tax and heating costs in Canada, and the mortgage an average Canadian would qualify for based on a 32% debt service ratio. (Source CMHC)
Below is a table with information regarding mortgage insurance. If you are unable to put 20% of your purchase price down on your home, you may be required to pay mortgage insurance. With mortgage insurance, you are able to put down as little as 5%. CMHC is one of the primary providers of this insurance and their premiums are as follows:
| Financing Required | Premium % of Loan Amount |
| Up to and including 65% | .50 |
| Up to and including 75% | .65 |
| Up to and including 80% | 1.00 |
| Up to and including 85% | 1.75 |
| Up to and including 90% | 2.00 |
Between 90.01 and 95%
|
2.75 2.90 |
Secured Line of Credit Surcharge
|
.25 3.40 |
| *Premiums in Ontario and Quebec are subject to provincial sales tax - the sales tax cannot be added to the loan amount. | |
(Source: CMHC)
