How Much Home Can I Really Afford?
The ins and outs of affording a home can be overwhelming – even those who've gone through it before find it stressful… We do have some good news for you though! It doesn’t have to be that way. We’re here to answer a few common questions.
What can I afford?
Whether it’s a second floor condo or spacious executive mansion, you probably already have an idea about what you want. Take a look at listings or talk to a Realtor to figure out how much a home like that costs in the location you are interested in.
Then it’s time for a reality check. Using a mortgage affordability calculator is a quick way to get an idea about how much you’ll actually be able to borrow. Then look at the mortgage payments you’ll need to pay to check that they’ll fit within your budget.
What’s the minimum down payment I need to make?
The Government of Canada breaks it down for us below. Keep in mind that your lender may require more depending on your circumstances (for example, if you're self-employed or have a poor credit history).
Where can I get the down payment?
Normally, your minimum down payment must come from your own funds. You may want to investigate options such as using your RRSPs or TFSAs.
It's best to save up for your down payment and minimize your debts. Anything you can do to save money will reduce the amount of mortgage you need. Some ideas for saving money:
If you don’t have a budget, let’s start there. Consider using a tool such as the Prosperity Tracker. Alerts will help you stay on track
Set up a TFSA account specifically dedicated to saving up for your home (hands off!)
Look for opportunities to make small changes every day to save money
Instead of flying international for your vacay, take a local trip and put the savings towards your down payment
Contact your credit union to set up pre-authorized transactions to a TFSA or investment savings account
See if your employer can redirect a portion of your paycheque to a separate account
Use cashback from your credit card or loyalty programs to increase your savings
Start a side hustle to make extra money towards your down payment
When you’re ready, we’ll help you choose the mortgage that’s right for you.