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Understanding mortgage affordability calculators – MoneySense

November 10, 2021 Renee Sylvestre-Williams
Understanding mortgage affordability calculators - MoneySense


We know that home affordability is getting further out of reach for a lot of Canadians. But, what affects mortgage affordability? How is it calculated by financial institutions and lenders? And what are the hidden costs that should be factored into actual mortgage affordability for potential home buyers?

“When you put your numbers into a mortgage affordability calculator or work with a mortgage professional, they’ll let you know how much mortgage you qualify for,” explains Sean Cooper, mortgage broker and author of the book Burn Your Mortgage

He says calculators are a good place to start in figuring out how much you can afford to borrow. But just because they provide you with a specific number doesn’t mean you should go and apply for that amount, he says. Other costs may not be included in those calculations. 

“It’s an important exercise to sit down and confirm that you can afford to [pay that back each month] on a property, because you have to factor in things like property taxes, utilities, property condo fees—if applicable—childcare costs, as well as repairs and maintenance.”

How mortgage affordability works

Mortgage affordability means two things: The first is how much a person can borrow based on current income, the amount of the downpayment, living expenses (heat, taxes, etc.) as well as debt. As an individual, the higher your mortgage affordability, the “more house” you can afford.  

The term affordability can also mean the cost of living in a particular part of Canada relative to the average income in that area. If housing costs are high compared to local incomes, the area is considered a less affordable place to live. 

Cities like Toronto, Vancouver and Hamilton are considered “less affordable” because housing prices have outpaced the average salary, whereas in other parts of Canada, such as Saskatoon and Regina, average salaries are more in line with housing costs, which makes them “more affordable.”

In the city of Toronto, for example, the average home costs $1,136,280—nearly 23 times the 2019 average per capita income of $49,800—according to Statistics Canada and Toronto Regional Real Estate Board data. 



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