What mortgage can I get with a $70,000 salary in Canada?
The Straightforward Scenario
As an aspiring homeowner, you may ask yourself, “What mortgage can I afford on a $70K salary?”. Ultimately, the answer to this question depends on several factors, including your down payment savings, debt, and interest rates.
First, let’s take a look at the significance of the salary. The gross debt service ratio is a measure that financial lenders use to assess the proportion of debt a homebuyer can take on. A lender will typically lend up to 39% GDS, meaning your monthly mortgage payment should be no more than 39% of your monthly income after your existing debts. A $70,000 salary comes out to a maximum payment of $2,275 (note that taxes and utilities must also be accounted for in this amount).
The next important factor to look at is your down payment . A larger downpayment makes homeownership more affordable by reducing the loan amount and size of monthly payments. As such, saving money for your down payment is an essential step towards being able to purchase a home.
Finally, interest rates greatly influence the maximum price you can afford for a new home. Lower interest rates make it a good time to buy a house, increasing the mortgage amount you can take on.
Putting this information together, the chart below shows a few different scenarios of what mortgage you could afford with a $70,000 salary based on various rates and down payment amounts:
(Table assumes 30-year term, Ontario property tax, Ontario home insurance cost, and $500 of monthly debts)
| Scenario 1 | Scenario 2 | Scenario 3 | Scenario 4 | |
|---|---|---|---|---|
| Annual Income | $70,000 | $70,000 | $70,000 | $70,000 |
| Mortgage Rate | 3.50% | 3.50% | 5.50% | 5.50% |
| Down Payment | $20,000 | $60,000 | $20,000 | $60,000 |
| Max Home Price | ~$345,000 | ~$380,000 | ~$283,000 | ~$319,000 |
| Monthly Payment | ~$1,775 | ~$1,775 | ~$1,775 | ~$1,775 |
Note: These values are estimates and may not reflect exact affordability calculations for every individual. They are based on general assumptions and are intended to provide a rough idea of how income, debt, interest rates, and down payments affect home affordability.
Looking at the table, we can see that the down payment and mortgage rate can significantly impact a homebuyer’s maximum mortgage. Another important piece of information to keep in mind is that lenders will not give a mortgage if you do not pay a minimum down payment percentage (usually 5%).
Combining Incomes
One great way to increase the maximum mortgage you can afford is by combining incomes. A joint mortgage allows you to apply using the combined income of two individuals living under the same roof. While this process is most commonly done with a spouse, it can be done with a friend or anyone else the lender will accept.
A joint mortgage will not only allow you to increase the monthly payments that you can make but will also improve your ability to make a larger down payment. Given the current high cost of homeownership, especially in major cities, joint mortgages have become a very common option in Canada. Below is a table displaying the financial benefits of a joint mortgage:
| Individual Mortgage | Joint Mortgage | |
|---|---|---|
| Annual Income | $70,000 | $140,000 |
| Mortgage Rate | 3.50% | 3.50% |
| Down Payment | $30,000 | $60,000 |
| Max Home Price | ~$353,000 | ~$828,000 |
| Monthly Payment | ~$1,775 | ~$4,050 |
The value of a joint mortgage is clearly demonstrated, more than doubling the maximum home price a buyer can afford.
Alternative Lenders
Another way to increase one’s maximum mortgage is by looking beyond the big banks to alternative mortgage lenders. Alternative lenders can be great options for those with low credit scores, high debt, or complex incomes to secure a mortgage. The following are the four main kinds of alternative lenders:
- Private Lenders - e.g. Clover Mortgage , Canadalend, Alpine Credits
- B-Lenders - e.g. First National, MCAP, Home Trust
- Credit Unions - e.g. Meridian, DUCA, Alterna Savings
- Small Banks - e.g. ICICI, Equitable, Canadian Western
Alternative lenders are not heavily regulated in Canada, allowing them to rely on collateral value and be more lenient in assessing an applicant’s income. They will often overlook bad credit , are okay with unconventional income (e.g. self-employed), and allow GDS ratios as high as 60%. A combination of higher home prices and stricter regulations are pushing more people toward alternative lenders. These are often called “sub-prime mortgages”.
What Are Mortgage Agents Saying?
When analyzing your home-buying options, brokers stress that affordability isn’t just about income. Factors like debt load, credit history, interest rates, and down payment size all play a crucial role in determining what’s manageable in the long term.
While lenders may allow a Gross Debt Service ratio of up to 39%, mortgage brokers often advise staying comfortably below that threshold. Maintaining a healthy GDS provides breathing room for unexpected expenses and reduces financial stress.
Overall, knowing your numbers will help you target the right homes for your budget.
For more information on how you can achieve your home ownership goals and to learn more about private lending options, Contact Clover Mortgage today!
FAQ
What income do you need for a $300K home in Canada?
Using the same assumptions as the scenario above (3.50% mortgage rate and 39% GDS) and a minimum down payment of 5% ($15,000), you would need a minimum annual income of ~$64,000 and have a monthly payment of ~$1,600.
What income do you need for a $400K home in Canada?
A $400,000 mortgage would require a minimum annual income of ~$79,000 and have a monthly payment of ~$2,060.
