How Much House Can You Afford in Canada? A 2026 Guide

The 5-Step Affordability Framework

True home affordability comes down to five distinct calculations. Work through each one in order to arrive at a realistic budget.

Step 1 — Your Maximum Mortgage (The Stress Test)

All buyers using a federally regulated lender must qualify at the higher of 5.25% or their contract rate plus 2%. This stress test effectively reduces your maximum borrowing power by roughly 20% compared to qualifying at the actual offered rate.

As a rough starting point, most Canadians can borrow approximately 4 to 4.5 times their gross household income — though this varies based on existing debts, the qualifying rate, and amortization period.

Estimates only. Your actual maximum depends on existing debts, amortization, and current qualifying rates.

Step 2 — Your Down Payment

The minimum down payment in Canada depends on the purchase price:

• Under $500,000: Minimum 5% down
• $500,000 to $999,999: 5% on the first $500,000 + 10% on the remainder
• $1,000,000 and over: Minimum 20% down — no exceptions

A larger down payment reduces your required mortgage, lowers your monthly payments, and may eliminate the need for CMHC mortgage insurance entirely if you reach 20%.

Step 3 — CMHC Mortgage Insurance

If your down payment is less than 20%, you are required to purchase mortgage default insurance through CMHC. This premium is added directly to your mortgage balance — you do not pay it upfront in cash, but you do pay interest on it over the life of the mortgage.

Step 4 — Closing Costs

Closing costs must be paid in cash at the time of closing — they cannot be added to your mortgage. Budget for 1.5% to 4% of the purchase price in addition to your down payment.

Key closing costs to budget for:

• Land transfer tax — varies significantly by province (use our calculator to find your exact amount)
• Legal fees: $1,500 – $3,000
• Home inspection: $400 – $700
• Title insurance: $200 – $400
• Moving costs: $800 – $3,000+ depending on distance
• Adjustments: Property tax and utility prepayments from the seller

Step 5 — Ongoing Ownership Costs

Affordability is not just about getting approved — it is about comfortably managing the ongoing monthly costs of homeownership on top of your mortgage payment.

• Property taxes: Typically 0.5%–1.5% of assessed value per year. On a $700,000 home in Ontario, expect roughly $5,000–$8,000 per year.
• Home insurance: $1,200 – $3,000+ per year depending on the home and location
• Maintenance and repairs: Budget approximately 1% of the home's value annually. A $700,000 home = $7,000/year on average.
• Condo fees (if applicable): $300 – $800+ per month, depending on the building
• Utilities: Heating, hydro, water — varies by property size and type

The 30% Rule — A Practical Guideline

Rather than stretching to the maximum your lender will approve, consider what monthly housing costs you can comfortably sustain while still saving for retirement, maintaining an emergency fund, and living your life.