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Buying a home in Ontario is exciting – from exploring neighbourhoods to imagining your future in a new space. But before you fall in love with that perfect property, it’s crucial to know how much income you need to qualify for the mortgage. Ontario’s housing market, especially in cities like Toronto, can be pricey. In fact, as of early 2024 the average Canadian home required an annual household income of around $152,000 to afford with a minimum down payment – and Ontario prices are higher than the national average. That means many Ontario buyers might need well over a six-figure income to comfortably purchase a home.
Understanding the income required for a given home price helps you set realistic expectations and avoid disappointment. It answers questions like “Can I afford this home?” or “What price range should I be shopping in?” upfront. By knowing the income needed, you can adjust your home search or financial plan accordingly – before you invest time in house hunting or submitting offers. This knowledge empowers you to budget confidently, target the right homes, and save time in your journey. It also puts you in a stronger position when you’re ready to get pre-approved for a mortgage, because you’ll already have an idea of what lenders will expect to see in terms of income.
At Turkin Mortgage, we want to make this step as easy and stress-free as possible for Ontario homebuyers. That’s why we’ve created a Mortgage Required Income Calculator tailored for the Ontario market. In this guide, we’ll show you how to use our calculator tool and explain the factors that determine your required income. Our goal is to give you clarity and confidence about your home purchase. With the right information (and the right team) by your side, getting a mortgage can be quick, easy, and even enjoyable. Let’s dive in!
Ready to find out how much income you’ll need for your dream home? Our Mortgage Required Income Calculator for Ontario takes the guesswork out of the equation. It’s a simple tool where you input key details about your potential home purchase, and it instantly calculates an estimate of the annual income required to qualify for that mortgage.
How to use the calculator: You’ll be asked to enter a few pieces of information:
Home Price or Mortgage Amount: How much do you plan to spend on the home (or how much do you need to borrow)?
Down Payment: How much you intend to put down upfront. (The minimum in Canada is 5% for homes up to $500k, more on that below.)
Interest Rate: The current mortgage interest rate or an approximate rate you expect to have.
Amortization Period: The length of time to pay off the mortgage (often 25 years for first-time buyers with <20% down, or up to 30 years with larger down payments).
Monthly Expenses: (Optional) You can include estimated property taxes, heating/utility costs, and any condo fees or other debt payments (like car loans). These help make the calculation more accurate for your situation.
Once you input these details, hit Calculate. In seconds, you’ll see an estimated required gross annual income needed to afford that scenario. For example, if you’re eyeing a $550,000 home with a $50,000 down payment, the calculator might show you need roughly $120,000 in annual income to qualify . Increase the home price to $770,000 with the minimum down payment and the required income jumps to around $155,000 . The tool adjusts dynamically as you change inputs, so you can try different scenarios – maybe a bigger down payment or lower price – and see how that affects the income needed.
What the results mean: The output is an estimate of the minimum income a lender would likely expect you to have to approve that mortgage. It considers standard lender guidelines and regulations (which we’ll explain in the next section). If your household income meets or exceeds that number, you’re in good shape for affordability. If it’s lower, you might need to adjust your plan – perhaps look at a lower price range or improve other aspects of your finances. The calculator’s result is essentially answering, “Given this purchase scenario, how much do I need to make per year to pass the mortgage lenders’ tests?”
Important disclaimers: Keep in mind this calculator provides a rough estimate for planning purposes. It uses typical rules (like debt ratio limits and interest rate “stress tests”) across the industry to gauge affordability. Actual lender requirements may vary slightly. Factors like your exact credit score, the type of property, or lender-specific policies could affect the outcome. Also, interest rates fluctuate – if rates rise, the required income for the same mortgage amount would increase (and if rates drop, it would decrease). The calculator assumes a certain threshold for approval (usually using a higher qualifying rate – more on that below).
Finally, note that this tool doesn’t constitute an official approval or offer. Think of it as your personal planning guide. The number it gives is a starting point. For a definitive answer, you’ll want to move on to a pre-approval with a lender or broker. But by using the calculator first, you’ll be better prepared and informed going into that conversation. It’s all about giving you clarity and saving you time in the Ontario home buying journey.
You might be wondering “How does the calculator (and the lender) figure out how much income I need? Where does that number come from?” Lenders in Ontario – and across Canada – use a set of guidelines and formulas to determine if your income is sufficient for a given mortgage. Understanding these key factors will not only demystify the calculator’s results, but also help you plan ways to improve your approval chances. Here are the major components that go into calculating required income:
One of the first things lenders look at are your debt service ratios – basically, how much of your income would go towards housing costs (and all debts) if you take on this mortgage. There are two main ratios: Gross Debt Service (GDS) and Total Debt Service (TDS).
GDS is the percentage of your gross income (before taxes) that would be used to pay for your basic housing costs: mortgage payment (principal + interest), property taxes, heating/utility costs, and if applicable, half of any condo fees . Lenders have a maximum they allow for GDS – typically around 35% to 39%. This means, under guidelines, no more than ~39% of your income should go to mortgage payments, property tax, heating, and condo fees combined . If the calculator finds that your housing costs would be more than that percentage of your income, it knows your income isn’t high enough for that scenario.
TDS is the percentage of your income needed to cover all your debt obligations – that includes housing costs (the GDS stuff)plus any other debts like credit card payments, car loans, student loans, lines of credit, etc. Lenders usually cap TDS at around 42% to 44% of your gross income . In other words, after adding your other debt payments on top of the housing costs, the total shouldn’t exceed roughly 44% of your income. This ensures you have a buffer and aren’t over-leveraged with debt.
When you use the calculator, it’s running these ratio tests in the background. For a given home price and down payment, it estimates the monthly mortgage payment (using the interest rate and amortization). Then it adds an estimate for property taxes (you can input an amount or use a typical percentage), a standard amount for heating/utility costs (often at least $100/month in Canada ), and any condo fee or debt payments you entered. It sums those up and compares to your income. If the expenses are too high relative to income, the calculator will indicate a higher required income until those ratios are in the acceptable range. For example, if you were trying to only use $70k income to afford a $500k home but the ratios come out to, say, 50% of income, that won’t fly – the calculator might bump the required income to around $120k so that those costs become ~40% of income instead.
The bottom line: lenders want to be confident you can comfortably pay your mortgage without stretching your budget too thin. GDS/TDS ratios are their way of quantifying that. Our calculator uses common maximums (about 39% GDS and 44% TDS) to estimate the minimum income you’d need so that you stay within those limits .
Another critical factor in Canada (including Ontario) is the mortgage stress test. Even if you secure a low interest rate on your mortgage, lenders are required to “stress test” your affordability by calculating your payment at a higher interest rate. Specifically, they will use whichever is higher: either 2% above your actual mortgage rateor a benchmark rate set by the government (currently 5.25%) . This policy is in place to ensure you could still afford your mortgage if rates rise in the future.
What does this mean for your required income? It means the calculator is likely using a higher rate to qualify you than the rate you entered. For instance, if today’s 5-year fixed rate is 4.5%, the lender will test your ability to pay the mortgage at 6.5% (4.5% + 2%) since that’s higher than the 5.25% benchmark. This makes your hypothetical mortgage payment larger in the calculation, which in turn requires more income to keep the debt ratios in line. It can be a bit of a reality check – you might think “I can afford the payments at 4.5%”, but the bank is calculating as if it were 6.5%. Our Ontario income calculator incorporates this stress test rule, so the required income it spits out is one that should satisfy the stress test criteria as well. It’s one of the reasons the required income can seem higher than you’d expect – it’s building in a safety margin.
Important: This stress test applies to all mortgages from federally regulated lenders, whether you’re putting 5% down or 20% down or more (in other words, both insured and uninsured mortgages). So almost everyone has to qualify at the higher rate . Knowing this, it’s wise to be a bit conservative. If the calculator says you need, say, $100k income for a certain mortgage, that’s already based on the worst-case (higher rate) scenario. If you’re right around that number, you might want to aim a little higher or reduce the mortgage amount for a comfortable approval.
Your down payment doesn’t just affect how much you need to borrow – it also influences the required income through a couple of mechanisms. In Ontario (and Canada), the minimum down payment required is 5% of the purchase price up to $500,000, plus 10% of any portion above $500,000 (and 20% down if the home price is $1,000,000 or more, since homes $1M+ aren’t eligible for default insurance) . For example, on a $600,000 home, the minimum down payment would be $5% of $500k ($25,000) plus 10% of the remaining $100k ($10,000) for a total of $35,000 down. If you only put the minimum, you’ll be borrowing the rest – in this case $565,000.
Why does this matter for income? Two reasons:
Mortgage size and payments: A smaller down payment means a larger mortgage loan, which means higher monthly payments. Higher payments require higher income to keep the debt ratios in check. If you can put a bigger down payment, you borrow less and your payments drop, which could lower the income needed. For instance, consider a $400,000 home. With 5% down, you borrow $380k; with 20% down, you borrow $320k. That difference might be a few hundred dollars less on the monthly payment, which could translate to needing significantly less income to qualify.
Mortgage insurance premiums: In Canada, if you put less than 20% down, you are required to get mortgage default insurance (often called CMHC insurance, though there are 3 providers) . This protects the lender in case of default, but you as the buyer pay the premium. The premium is added to your mortgage amount (you don’t pay it in cash upfront; it gets rolled into the loan). So using the earlier example, that $565,000 mortgage might actually become roughly ~$585,000 after adding the insurance premium. Now your payments are based on the $585k. It’s not a huge jump, but it does increase the required income marginally because your effective loan is bigger . On the flip side, if you put 20% or more down, no insurance is needed – you avoid that extra cost, and you can sometimes even extend your amortization to 30 years which lowers payments (uninsured mortgages can go beyond 25 years amortization, giving you flexibility).
The calculator factors in the down payment you input. If it’s under 20%, it will account for the insurance premium in the calculation of your mortgage payment (and thus income). It will also enforce the minimum down payment rules – it won’t let you calculate something that’s below the legal minimum. When planning, remember: a larger down payment not only saves you on interest in the long run, it can immediately make it easier to qualify. If you’re finding the required income is higher than your current income, one solution might be to save up a bit more down payment to bring that required income down.
While our calculator doesn’t explicitly ask for your credit score, it’s worth noting that your credit profile plays a role in mortgage qualification. Generally, a higher credit score (e.g. 680 or above) gives lenders confidence and can allow for more flexibility with those debt ratio limits. For instance, borrowers with excellent credit can often stretch to the upper end of the GDS/TDS ranges (39% and 44%) , whereas someone with a lower credit score might be held to more conservative ratios. If your credit is very low, you might be required to have a smaller loan (or higher income) than the calculator indicates, because some lenders won’t go to the maximum ratios for high-risk cases.
Credit score also impacts your interest rate – with a great score, you’ll qualify for the best rates (keeping payments lower and required income lower). With a bruised credit history, you might only qualify with alternative lenders at higher rates, which in turn increases your monthly payment and income requirement.
In short, credit affects the required income indirectly. The calculator assumes a typical scenario (and you can input the interest rate you expect based on your credit). If you know your credit isn’t strong, be a bit more conservative – perhaps try plugging in a slightly higher rate to see how it impacts the needed income. And if your credit is excellent, congratulations – that will work in your favor when lenders review your application. Maintaining a good credit score (by paying bills on time, keeping balances low, etc.) is a smart move as you prepare for homeownership. It can be the difference that gets you approved if your income is just shy of the calculated requirement, for example.
Those are the major factors that determine your required income for a mortgage. In summary: the lender wants to ensure your housing costs and debts won’t take up too much of your income (that’s the debt ratios), they test your finances against higher interest rates (stress test), they consider how much skin in the game you have (down payment and if insurance is needed), and they look at your financial trustworthiness (credit). Our Ontario Mortgage Required Income Calculator brings all these pieces together. Next, let’s look at some Ontario-specific costs and programs that can also influence your affordability.
Ontario homebuyers face a few unique factors and costs that can affect how much mortgage you can carry and how much income you’ll need. It’s important to be aware of these local considerations when planning your purchase:
Property taxes are an often overlooked piece of the affordability puzzle. In Ontario, property tax rates vary by municipality, and they are applied to your home’s assessed value annually. For example, the City of Toronto has relatively low property tax rates (around 0.6% of the property value per year), while some smaller Ontario cities have higher rates around 1% or more. Property tax is included in your GDS ratio calculation – it’s part of your housing costs that lenders consider . This means if a home has very high property taxes, you’d need more income to afford it compared to a similar-priced home with lower taxes.
When you use the calculator, you can input an estimated annual property tax amount. If you’re not sure, a rule of thumb is to assume about 1% of the home price per year (actual rates could be higher or lower depending on the city). For a $600,000 home, that would be about $6,000/year ($500/month). The calculator adds this to your monthly costs. If you’re shopping in areas with higher taxes or if the specific property has additional levies (like local improvement fees), remember that these will reduce the mortgage amount you qualify for on a given income. On the flip side, buying in a municipality with lower taxes can slightly improve your affordability.
Bottom line: don’t forget to budget for property taxes. They’re an ongoing cost of homeownership and do factor into how much income you’ll need. The good news is the calculator helps you account for them upfront so there are no surprises.
In Ontario, whenever real estate changes hands, there’s a Land Transfer Tax (LTT) charged by the province. This is a one-time cost paid at closing of your home purchase (it does not get added to your mortgage, you typically need to pay it in cash). The amount is based on the purchase price of the property – Ontario uses a tiered tax rate system. For example, on a $500,000 home, the Ontario LTT comes out to about $6,475. The rate starts at 0.5% on the first $55,000, then 1% on $55k–$250k, 1.5% on $250k–$400k, and 2.0% on $400k–$2 million (with a further 2.5% above $2M) .
If you’re a first-time home buyer in Ontario, you’re in luck: you can get a rebate on the land transfer tax up to $4,000 . This effectively means if your home costs ~$368,000 or less, you’d pay no provincial LTT (the rebate would cover it). On more expensive homes, you’d save $4,000 off the total tax. For example, if the LTT on a home is $6,475, a first-time buyer would pay $2,475 after the max rebate. (We’ll talk about first-time buyer programs more in a moment.)
If you’re buying in the City of Toronto, note that there is an additional municipal Land Transfer Tax on top of the provincial one (Toronto doubles up the tax). Toronto’s rates mirror the provincial, and there’s a first-time buyer rebate up to $4,475 for the city tax . So first-time buyers in Toronto can get a total of about $8,475 in rebates (provincial + city). This is a significant upfront cost to be aware of. While it doesn’t directly affect the income required for mortgage approval (since it’s not a monthly cost or debt), it does affect how much cash you need to close the purchase. Lenders will want to ensure you have funds to cover closing costs like land transfer tax, so it’s part of the overall financial picture.
In summary, Ontario’s Land Transfer Tax is something you need to plan for. Use online LTT calculators or ask your real estate lawyer for the exact figure based on your price. And if you’re a first-time buyer, be sure to claim those rebates – that’s money saved!
Every homeowner has to keep the lights on and the heat running. Utilities (like heating, electricity, water) are not only part of your monthly household budget, but lenders also factor in a portion of these costs when calculating your affordability. Specifically, as mentioned earlier, they’ll include a reasonable estimate for heating costs in the GDS ratio – typically around $100 to $200 per month in Ontario (the exact amount can depend on the property size and type, but $100 is a common minimum used in calculations). If you’re buying a condo or apartment, lenders often use the maintenance fees info: they will count 50% of condo fees as part of your debt ratios (the rationale being that a portion of condo fees covers expenses like building insurance/maintenance which is somewhat like “housing cost”).
So how do utilities and condo fees affect required income? Higher ongoing costs = higher required income. If you’re looking at an older house that isn’t energy efficient and has heating costs of $300/month, that will eat more of your income (and thus require you to earn more) than a newer, well-insulated house with $100/month heating. Similarly, a condo with $800/month maintenance fees will significantly reduce the mortgage amount you qualify for on a given income (since lenders will add $400 of that to your monthly obligations in the ratios), whereas a condo with $300 fees leaves more room for mortgage payment. Our calculator allows you to input these values (heating, condo fees) to tailor the estimate to the specific property. If you leave it blank, it will assume a default (like $100 heating, $0 condo if not applicable).
For planning purposes, always account for basic utilities (heat, hydro, water) in your personal budget beyond just the mortgage payment. The bank does, and so should you – owning a home involves these extra bills which renters might not directly pay. In Ontario’s cold winters, heating fuel (gas or electric) is an important cost. The good news is that these are usually predictable and you can manage them (e.g., through energy-efficient upgrades or condo fee negotiation via the condo board in the long run).
In short: don’t overlook the impact of utilities and condo fees on both your mortgage approval and your monthly affordability. Our tool – and the lenders – build in a cushion for these expenses so that you’re not stretched too thin after paying your mortgage.
If you’re a first-time home buyer, you have access to several programs and incentives that can help make buying a home in Ontario more affordable. We already touched on one big perk – the land transfer tax rebate. But there are a few other incentives worth knowing, which might indirectly help with the required income or overall financing:
Land Transfer Tax Rebate (Ontario & Toronto): We covered this above – up to $4,000 back on Ontario’s LTT for first-timers , and up to ~$4,475 on Toronto’s municipal LTT . This doesn’t change your mortgage calculations, but it does lower your cash needed at closing, which can free up some of your savings (maybe allowing you to put a slightly larger down payment, thereby reducing required income).
Federal First-Time Home Buyer Incentive: This is a program where the Government of Canada offers to loan you a portion of the home’s purchase price to boost your down payment. They will provide 5% of the price for a resale (existing) home, or up to 10% for a new construction home, in exchange for an equivalent percentage ownership share in the property. The idea is that by effectively increasing your down payment, your mortgage amount is smaller, making your monthly payments (and required income) lower. There are eligibility requirements – your household income must be below a certain limit (around $120,000, or up to $150,000 in high-cost areas), and the purchase price is capped (roughly 4 to 4.5 times your income). While not everyone will qualify or want to use this incentive, it can help some first-time buyers get into the market with a more manageable mortgage. Essentially, the government becomes a silent partner in your home to reduce your lending needs upfront.
Home Buyers’ Plan (RRSP Withdrawal): The federal Home Buyers’ Plan allows first-time buyers to withdraw up to $35,000 from their RRSP (Registered Retirement Savings Plan) per person ($70,000 for a couple) to use as a down payment, tax-free. You do have to pay it back into your RRSP over 15 years, but it’s a great way to access your retirement savings for your first home purchase. In Ontario’s high-priced market, this can be a crucial source of down payment funds. A larger down payment thanks to RRSP funds could mean avoiding CMHC insurance or just having a smaller mortgage – either way, it can lower the income needed to qualify.
First Home Savings Account (FHSA): A newer program, the FHSA is like a hybrid of an RRSP and TFSA specifically for first-time home buyers. You can contribute up to $8k per year (to a max of $40k) and get a tax deduction (like an RRSP), and withdrawals for a first home are tax-free (like a TFSA). Money in this account can grow investment-wise. When you’re ready to buy, you can withdraw the savings to use towards your down payment. If you have a few years to plan, this is an excellent tool to boost your down payment faster and more efficiently. Again, a bigger down payment = a smaller required mortgage and less income needed.
First-Time Home Buyers’ Tax Credit: This is a one-time income tax credit you can claim for the year you purchase your first home. It was recently doubled, so it’s worth up to $1,500 in tax relief. While it doesn’t affect your mortgage qualification, it’s extra cash back at tax time that can help with closing costs or moving costs.
Ontario doesn’t have additional provincial first-time grant programs for down payment (some other provinces have had loan programs, etc., but Ontario relies on the above national programs and the tax rebate). However, some cities or regions offer their own down payment assistance for low-income buyers – if applicable, you’d have to check the specific municipality (for example, a region might offer a forgivable loan for down payment if you meet certain income criteria).
How do these incentives affect the required income? Directly, things like the tax credit or land tax rebate don’t change the ratios or income needed – they just save you money. But indirectly, any program that effectively increases your down payment or reduces your mortgage (like the Incentive, RRSP, FHSA) will lower the mortgage amount and thus reduce the income required. For instance, if the government kicks in 5% on a $600k home ($30k), and you were putting $30k, that combined $60k down is 10%. Your mortgage is $540k instead of $570k – that might shave some $ off the monthly payment and a few thousand off the needed annual income.
As a first-time buyer, it’s worth exploring these programs. They can make homeownership more attainable. Our team at Turkin Mortgage stays up-to-date on these offerings and can help you navigate which incentives you qualify for – ensuring you take advantage of all the support out there for new homeowners.
After playing with the Mortgage Required Income Calculator, you now have an estimate of the income needed for your target price range. It’s important to put that number in context and understand how to use it:
Remember, it’s an estimate, not a guarantee. The required income result is based on typical guidelines. It’s very useful for planning, but it’s not an official approval. You might find that when you actually apply, a lender could approve you with slightly less income (or require slightly more) depending on their specific rules and your full financial picture. Treat the calculator’s output as a strong guideline. If you’re comfortably above the required income, you’re likely in great shape. If you’re below it, consider it a signal that you either need to adjust something or talk to a mortgage professional for advice.
Why the required income might seem high: Many buyers are surprised by how much income is needed, especially in expensive markets like Ontario. “Why do I need to earn over $100k to buy a $500k house?!” It comes down to the factors we discussed: the stress test making the payments higher on paper, the inclusion of other costs (taxes, etc.), and the conservative debt ratio limits. Lenders want to be sure you’re not stretched too thin. So yes, the calculator might tell you that you need a higher income than you expected. Don’t be discouraged – knowledge is power. Now you know the challenge, and you can strategize to meet it. Also, keep in mind that the calculator assumes you want to max out what you can afford. You don’t necessarily have to borrow up to the absolute limit of your qualification. Some people prefer to stay below the max for comfort.
If the number is just slightly out of reach, there may be solutions. Maybe you’re $5k shy in income – sometimes lenders can make exceptions or use other sources of income (overtime, bonuses, a co-signer’s income, etc.) to help. Or perhaps you have less debt in reality than what you plugged in (e.g., you plan to pay off a car loan before buying – doing so would improve your ratios). Small tweaks can bridge the gap.
If the required income is far above your current income, that’s a sign to revisit your home buying plan. You might need to set your sights on a lower price range or work on improving your financial situation (like saving a bigger down payment or paying off debt – see next section for strategies). The calculator can help here: try adjusting the inputs to see what brings the required income down. For example, “What if I put $20k more down?” or “What if I target a home $50k cheaper?” You’ll see the required income drop accordingly, and that can guide you toward a scenario that fits your budget.
Interpreting the result if you have high other debts: If you included significant monthly debt payments (like big car loans or credit card payments), the calculator’s required income might shoot up. That’s because those debts eat into your TDS capacity. In this case, be aware that paying down those debts or even closing them before you apply for a mortgage can substantially reduce the income needed. For instance, a $500/month car lease might require roughly $15k extra income to offset (since $500 is likely around 7-8% of a $80k income on TDS). If you paid off the car, suddenly that $15k income buffer isn’t needed. The calculator lets you see that impact by removing or reducing the debt input.
Seasonal and other costs: Note that the calculator doesn’t explicitly account for things like home insurance or maintenance, which don’t factor into lender ratios but will be part of your real budget. It’s wise, when you see the “required income,” to also think “Will I be comfortable making all the payments and other costs on my income?” Maybe you technically qualify, but you want to ensure you still have breathing room for saving, emergencies, and enjoying life. Lenders’ thresholds are maximums, not necessarily comfortable for everyone. So consider aiming for a bit of a buffer if you can.
In summary, use the result as a compass, not a verdict. It tells you the direction you need to go. And if it’s telling you something needs to change, don’t worry – there are plenty of next steps you can take to move closer to your homeownership goal. Let’s look at some of those next steps.
You’ve crunched the numbers and gained insight into your mortgage requirements. Now, how do you turn that knowledge into action? Here are the key next steps you can take to move forward on your home buying journey in Ontario. Each step will help you get closer to owning that home, and Turkin Mortgage is here to make the process easy, fast, and advantageous for you every step of the way:
Get Pre-Approved for Your Mortgage
Why: A mortgage pre-approval is essentially a dry-run of the mortgage application. A lender (or mortgage broker on your behalf) will review your income, credit, and down payment and determine the maximum mortgage you qualify for, as well as potentially lock in an interest rate for up to 120 days. This gives you a concrete budget to work with and makes you a more confident buyer. In competitive Ontario markets, sellers often prefer buyers who are pre-approved.
How: Turkin Mortgage offers a quick and hassle-free pre-approval process. You can start online or over the phone, and our team will guide you through the needed documents. We’ll shop your application across 35+ lenders to find you the best rate and terms – doing the comparison work for you, so you don’t have to . Our access to a wide network of lenders means we often secure better rates than you’d find on your own, potentially saving you thousands. Getting pre-approved with us is free and carries no obligation. It’s simply a smart step to clarify your position. Best of all, it’s fast – we know your time is valuable, and we pride ourselves on quick turnarounds (often within 24-48 hours) while maintaining superior accuracy. By getting pre-approved, you’ll confirm the income you need (aligning with our calculator’s estimate) and you’ll be ready to make an offer on a home with confidence. Ready to start? – Apply now for a Pre-Approval (hypothetical link) and let us help you secure the financing you need.
Speak with a Mortgage Professional for Personalized Advice
Why: Every homebuyer’s situation is unique. Maybe you have a future job promotion that will increase your income, or perhaps you’re juggling the decision of paying off debt vs. saving more down payment. This is where speaking with an experienced Ontario mortgage broker is invaluable. A professional can analyze the nuances of your scenario and offer tailored advice that an online calculator simply can’t provide. They may spot opportunities or solutions – for example, using a co-signer to boost income, or explaining lender programs for self-employed individuals – that change the equation in your favor.
How: Our Turkin Mortgage advisors are just a call or message away. We take a client-first approach to everything we do, which means listening to your needs and goals before suggesting any product. During a consultation, we’ll review your calculator results with you and discuss your options. Perhaps you’re concerned your income is a bit low – we might find that certain lenders allow higher ratios given your strong credit, or maybe a slight increase in your down payment could do the trick. Or, if you’re a first-time buyer, we’ll walk you through those incentive programs again and see which ones you can tap into. We’ll also answer all your questions – no question is too simple or too complex. Superior customer service is our hallmark; we want you to feel comfortable and informed. By the end of a conversation, you’ll have a clear roadmap and actionable steps. There’s no pressure – our advice is free, and our goal is purely to help you make the best decision. Many clients tell us that after one chat they feel “so much more at ease” about the process. We believe in building relationships for the long term, not just transactions, so you can trust that our recommendations are genuinely in your best interest.
Implement Strategies to Improve Your Mortgage Affordability
Knowledge is power – and now that you know the factors that influence your required mortgage income, you can work on improving those factors. Here are some concrete strategies to boost your affordability and make qualifying easier:
Increase Your Down Payment: Even an extra few thousand dollars can help. Consider using savings, bonuses, financial gifts from family, or programs like the RRSP Home Buyers’ Plan or FHSA to beef up your down payment. A larger down payment can eliminate the need for insurance at 20% or simply reduce your monthly payment and required income. It also shows lenders you’re financially prepared.
Pay Down Existing Debts: High credit card balances, car loans, or other loans can significantly impact the income you need (due to that TDS ratio). Prioritize paying down debts, especially high-interest ones, before taking on a mortgage. For example, if you can eliminate a $300/month car payment, that frees up enough room to potentially finance roughly an additional $60,000 of mortgage for the same income. Reducing debt not only improves your approval chances but also puts you in a healthier overall financial position as a homeowner.
Avoid Taking on New Debt: In the lead-up to your home purchase, try not to open new credit accounts or make big purchases on credit. New monthly obligations (like a new car lease or financing new furniture) will increase the required income and could jeopardize your mortgage approval. It’s best to delay major purchases until after your mortgage is secured.
Improve Your Credit Score: If your credit history has a few dents, take time to polish it. Pay all bills on time, correct any errors on your credit report, and keep your credit utilization low. Over 6-12 months, you can often boost your score significantly. A higher credit score might qualify you for better rates and more flexible lending, which indirectly lowers the income hurdle. If your score is already good, keep up the good work and avoid any missteps.
Consider a Co-Borrower or Guarantor: If it’s an option, adding a co-signer or co-borrower with income (like a spouse, partner, or parent) can help you qualify for a higher amount. Lenders will consider both incomes combined against the debts. This is a common route for some first-time buyers in Ontario who partner up or get help from a family member. It does come with shared responsibility, so it’s a personal decision – but it can significantly reduce the individual income needed.
Explore Different Locations or Property Types: If you find the income needed for your dream home is out of reach, you might broaden your search. Maybe a neighbouring town has more affordable prices (and property taxes) that fit your budget, or perhaps a condo or townhouse instead of a detached house could be an easier first step. Ontario has a wide range of markets – you might be able to find a gem that doesn’t break the bank.
Use First-Time Buyer Programs: As discussed, make sure you leverage any first-time buyer assistance if you qualify. A shared-equity incentive or a tax rebate won’t raise your income, but they can reduce the loan and cash needed, making the overall purchase more feasible. Essentially, it’s about working smarter, not harder with the resources available to you.
Each of these strategies can move the needle on your affordability. Even if you’re not in a rush to buy, starting on these steps now (like saving more or paying off debt) will put you in a stronger position when you’re ready. At Turkin Mortgage, we often help clients map out a 6-month or 1-year plan – for example, “pay off this credit card, save X more, then we’ll comfortably get you approved for Y amount.” We’re here to support you not just in getting a mortgage, but in improving your financial wellness so that owning a home is sustainable and enjoyable.
Finally, keep in mind that market conditions can change. Interest rates might go down (or up), which will affect how much you can afford. The Ontario real estate market might also shift. By staying in touch with us, we can update your plan as needed. We’re committed to helping you not only get a mortgage but get the right mortgage – one that you can manage with confidence.
Next Step: Have questions or ready to proceed? Reach out to our Turkin Mortgage team anytime. We’re here to provide clarity, reassurance, and expert guidance. Your goal of homeownership in Ontario is absolutely within reach – and we’ll help you get there with a mortgage solution that’s tailored to you.
There’s no single “minimum income” set by law to buy a house – it completely depends on the price of the home and your financial situation. In theory, someone with a modest income can buy a modest-priced home, whereas expensive homes require higher incomes. Lenders focus on whether your income is enough to keep the debt service ratios in line (generally housing costs under ~39% of income, and total debts under ~44% as discussed) . For example, if you wanted to purchase a home around $550,000 with minimum down payment, you might need an income in the ballpark of $120,000 per year to qualify. But for a smaller condo around $300,000, the income required could be more like ~$80,000 (assuming minimal other debts). Essentially, the lower the home price (and the less debt you carry), the lower the income needed. There is also no absolute minimum like “you must earn at least $50k” – it’s all relative to what you buy. It’s worth noting that in Ontario’s pricey markets, homeownership often requires a combined household income in the six figures for many properties. That said, if your income is on the lower side, you might still find opportunities in smaller communities or condos, or consider buying with a partner to pool incomes. The best way to find out your personal minimum income requirement is to use our calculator or get a pre-approval, which will consider your unique details.
Ontario follows the standard Canadian down payment rules: The minimum down payment depends on the home’s purchase price:
For homes priced $500,000 or less: Minimum 5% of the purchase price.
For the portion of homes priced between $500,000 and $999,999: 5% of the first $500k, 10% of the portion above $500k. (Example: for a $800,000 home, that’s 5% of $500k ($25k) + 10% of $300k ($30k) = $55,000).
For homes priced $1 million or more:20% of the purchase price (because homes $1M+ are not eligible for CMHC or insured mortgages).
These rules apply whether you’re a first-time buyer or not (there’s no reduced down payment for first-timers, everyone follows the same structure). Keep in mind these are minimums. You can always choose to put more down if you’re able, which can reduce your mortgage payments and save on interest. If you put less than 20% down, you will have to pay mortgage default insurance (which gets added to your mortgage). With 20% or more down, you avoid that insurance cost and you have the option of longer amortization (up to 30 years) which can lower your monthly payment.
Also, your down payment must come from your own resources (savings, RRSP via Home Buyers’ Plan, gift from family, etc.) – it generally cannot be borrowed. Lenders will want to verify that you have the down payment and enough extra to cover closing costs (they often expect you to have at least 1.5% of the purchase price available for closing costs, on top of the down payment).
In summary: Aim for at least 5% of the purchase price in savings for down payment (more if the home is above $500k). If you can reach 20%, that’s ideal to avoid insurance, but many buyers start with 5-10% and that’s perfectly okay as long as you budget for the slightly higher costs.
Yes, there are several programs to assist first-time home buyers in Ontario, which can help with your down payment and closing costs (though they don’t directly change lender income requirements, they make purchasing easier financially):
Land Transfer Tax Rebate: As a first-time buyer in Ontario, you can get a refund of up to $4,000 on the Ontario land transfer tax you’d owe . This typically covers the full tax on homes up to ~$368k. If you buy in Toronto, there’s an additional rebate of up to $4,475 on the city’s land transfer tax . Essentially, first-time buyers can save up to ~$8,475 if buying in Toronto (or $4k elsewhere in Ontario) on this closing cost. This rebate is claimed at the time of closing through your lawyer – it’s usually instant, meaning you pay reduced tax upfront.
First-Time Home Buyer Incentive: A federal program where the government offers to lend you 5% of the purchase price for a resale home, or 10% for a new build home, to put toward your down payment. It’s like a shared-equity mortgage – you’ll have to pay the same percentage of the home’s value back when you sell or after 25 years. No interest or ongoing payments on it. The idea is to lower your mortgage and monthly payments. There are eligibility restrictions (e.g., income typically <= $120k, and the mortgage + incentive can’t be more than 4x your income, although higher limits apply in Toronto/Vancouver). This can be useful if you qualify, as it can shave off a chunk of your mortgage upfront.
Home Buyers’ Plan (HBP): Lets you withdraw up to $35,000 from your RRSP (per first-time buyer) to use as a down payment, without the withdrawal being taxed. You then have up to 15 years to repay your RRSP. If you have been saving in an RRSP, this is a great way to boost your down payment. Couples can combine for up to $70k.
First Home Savings Account (FHSA): A new savings vehicle where you can contribute up to $40k (over several years, $8k max per year) and then withdraw it tax-free for your first home. It’s like getting RRSP tax deductions and TFSA growth in one. If you have a bit of time before buying, opening an FHSA can give you a boost toward your down payment goal.
First-Time Home Buyer’s Tax Credit: This is an income tax credit that you claim when filing taxes for the year you purchase. It was increased in recent years – now worth up to $1,500 back to you (it’s calculated as a $10,000 credit x 15% federal tax rate). It’s basically a nice refund to help with all those little expenses of moving or to cushion your bank account after closing.
Local Programs: Some municipalities or non-profits occasionally have programs for down payment assistance or rent-to-own transitions. For instance, there have been programs in the past in certain Ontario cities that provide a forgivable loan for down payment if you meet income thresholds and buy below a certain price. These come and go and often have limited funding, so it’s worth doing a quick search or asking the city housing department if any first-time buyer assistance is available locally.
To qualify as a “first-time home buyer” for most of these programs, you generally must not have owned a home anywhere in the world in the past 4 years (there are some nuances, for example, if you’re buying with a spouse who owned a home while you didn’t, etc.). The definitions might vary slightly by program.
In Ontario, the land transfer rebate is one of the most immediately beneficial – it’s a guaranteed saving if you’ve never owned before. The others (HBP, FHSA) are ways to help with down payment; the Incentive is a unique one that actually lowers your monthly costs at the trade-off of sharing equity. It’s optional and not super widely used, but can be a difference-maker for some.
We recommend first-time buyers take advantage of every program they can. Buying your first home can be financially challenging, so these incentives are there to ease the burden. When we work with first-time clients at Turkin Mortgage, we always ensure you’re aware of these and help you through the process of accessing them. It’s like getting a little boost on that first rung of the property ladder!
Yes, you absolutely can – being self-employed or a contract worker in Ontario doesn’t bar you from getting a mortgage. However, the qualification process can be a bit more involved, because proving your income is not as straightforward as it is for salaried employees. Lenders need to see that your income is stable and sufficient, even if it fluctuates or comes from business sources. Here’s what to expect and some tips:
Documentation: Most lenders will ask to see at least 2 years of your income history. This typically means providing your personal Notice of Assessment (NOA) from your tax returns for the last 2 years, and possibly your full T1 General tax returns or financial statements if you’re a business owner. They use these to determine your average income. For example, if you earned $70k net income in 2023 and $80k in 2024, they might average to $75k as your income for qualifying. If your income is rising year over year, some may even take the most recent year. But if it’s declining, they’ll be cautious. Lenders also like to see that your business is stable, so they may ask for business bank statements, proof of any contracts or ongoing clients (to show future income continuity), and that your taxes (GST/HST) are up to date . Essentially, be prepared to provide more paperwork than an employee would.
Income calculation: One challenge is that many self-employed people write off expenses to reduce taxable income. While that’s great for lowering taxes, it can make your declared income on paper look low. Lenders mostly go by the net taxable income on your NOA. So if you have a lot of write-offs and your NOA shows, say, $40k when your gross business revenue was $90k, the bank will likely consider you as earning $40k/year, which might not be enough for the mortgage you want. There are a couple of ways around this:
Some lenders or mortgage default insurers have stated income programs for self-employed individuals. These programs allow the lender to consider a reasonable income figure higher than your NOA, if you have a good credit score and a decent down payment (often at least 10% or more) . They basically acknowledge that your actual earning capacity is higher than what you pay tax on. They’ll look at your business revenue, industry norms, etc. to “gross up” your income for qualifying. You usually need to show at least 2 years in business for these programs and demonstrate financial responsibility (no credit issues, etc.).
Alternatively, you might decide to limit your expense write-offs for a year or two and declare more income on taxes leading up to a home purchase. Yes, you’d pay a bit more tax, but it could help you qualify for the mortgage you want by showing higher income. This requires some planning and advice from an accountant or financial advisor, but it’s a strategy some self-employed folks use.
Down payment and credit: Because verifying income can be trickier, lenders often compensate by being stricter on credit and down payment. A good credit score is very important when you’re self-employed. It gives lenders comfort that you manage finances well, which helps if your income evaluation is a bit unconventional. Also, if you can put at least 10-20% down, you’ll have more lenders willing to work with you, and you might avoid needing CMHC insurance or qualify under stated income programs more easily . With 20% down, some alternative lenders (who specialize in self-employed borrowers) might even be willing to overlook certain documentation in exchange for a higher interest rate. There are also “B lenders” and credit unions who take a common-sense approach if the big banks turn you down – they might accept 6 months of bank statements as proof of income, for instance, instead of NOAs.
Contract workers (T4A income): If you’re on contract but essentially working full-time hours, some lenders treat you similar to self-employed (want 2-year history), while others might treat as regular employment if you’re in the same field and have a letter of continued contract. It can vary. Generally, if you have a letter or reasonable assurance that your contract is ongoing or will be renewed, lenders will be okay after 1 year on the job. If you frequently switch contracts or have gaps, then they’ll default to needing a longer track record.
Tips: Start keeping organized financial records if you haven’t been (file your taxes on time, keep business and personal finances separate, etc.). Consider talking to a mortgage broker before you need the mortgage – they can look at your situation and advise if you should declare more income or how much you should save as down payment, etc., to meet the criteria. Every lender has slightly different rules, so a broker can match you with the one best suited for you.
The good news is, many Ontarians are self-employed and still achieve homeownership. It might require a bit more paperwork and patience, but that’s our specialty at Turkin Mortgage. We have lots of experience helping self-employed professionals, freelancers, and business owners get mortgages. We’ll present your case to lenders in the best possible light and find a lender who understands your line of work. Whether it’s through traditional income qualification or alternative methods, we’ll work hard to get you approved at a competitive rate. So yes – you can qualify, and we’re here to help make it happen!
It’s smart to plan for more than just your down payment and mortgage. Buying a property comes with a variety of other costs, both one-time closing costs and ongoing expenses. Here’s a rundown of what to budget for:
Land Transfer Tax: As discussed earlier, Ontario charges a land transfer tax on purchases (and Toronto has a second one). Unless you’re a first-time buyer getting a rebate, you’ll need to pay this at closing. It can be a significant amount (for example, ~$1,000 per $100k of property value, with higher rates on the portions above $250k/$400k). First-time buyers should budget the amount then expect the refund, while repeat buyers should have the full amount ready. This is due on closing day.
Legal Fees and Disbursements: You’ll need a real estate lawyer to handle the closing of the purchase. Legal fees in Ontario for a purchase typically range around $1,000 to $1,500, plus additional costs (called disbursements) for things like title search, registration of the deed and mortgage, and courier fees. All in, many buyers budget about $1,500 to $2,000 for lawyer costs. Your lawyer will also arrange title insurance (see below) and adjust things like property taxes or condo fees (if the seller prepaid some of these, you reimburse them for the portion after closing).
Title Insurance: Title insurance is usually purchased at closing (often through your lawyer) to protect you against title issues (like fraud, errors in surveys, etc.). It’s a one-time premium, usually around $250 to $400 depending on the property price. Sometimes this is itemized by the lawyer, or included in their quote.
Home Inspection (optional but recommended): If you had a home inspection done as part of your purchase (common with resale houses), that typically costs around $300 to $600 in Ontario, depending on the size and complexity of the property. This would be paid at the time of inspection, before closing.
Appraisal Fee: If you have a high down payment (20% or more) or you’re using certain lenders, an appraisal might be required by the lender to confirm the property’s value. Sometimes for insured mortgages (CMHC) the insurance covers the appraisal or uses automated valuations, but for conventional mortgages the lender often wants a third-party appraisal. This can cost about $300 to $500. Some lenders will cover this cost, especially if you go through a broker who can sometimes get the lender to pay for it (another perk we try to secure for our clients!). But it’s good to have a budget for it just in case.
Home Insurance: When you get a mortgage, the lender will require that you have property insurance in place effective from closing day (fire and peril insurance for at least the value of the home or the mortgage amount). You’ll start an insurance policy (for the house or condo contents) which typically costs a few hundred dollars per year (could be $50-100 a month depending on coverage). You usually pay the first year’s premium or set up monthly payments. It’s not a closing fee per se, but it’s an immediate ongoing cost once you own the home.
Moving Costs: Don’t forget to budget for the actual move! Whether it’s hiring movers (which could be a few hundred up to a couple thousand dollars depending on distance and amount of stuff) or renting a truck and buying boxes, there will be some costs here. It’s often smaller in comparison to the above, but plan perhaps a few hundred at least.
Utility setup fees and adjustments: You may have to pay deposits or setup fees to utility companies when you start new accounts (for electricity, water, gas, internet, etc.). Also, if the seller has pre-paid any utilities or property taxes beyond the closing date, you’ll need to reimburse them (this is usually handled in the statement of adjustments by your lawyer). For example, if the seller paid property tax for the full year and you take possession halfway through the year, you owe the seller for the half year.
Condo fee adjustment: If buying a condo, the seller might have paid the monthly maintenance fee for the month of closing, so you’d pay them back your share from the closing date onward.
Furniture and Appliances: After moving in, you might need to purchase appliances (if the home didn’t include them) or furniture, curtains, etc. These aren’t required costs, but many new homeowners find themselves spending on some items to make the house livable. It’s a good idea to keep some savings aside for these post-move expenses.
Emergency Fund: Not exactly a fee, but ensure you don’t empty all your savings on the down payment and closing costs. As a homeowner, unexpected repairs can pop up – the water heater might fail or you might discover a leaky pipe. It’s wise to have a buffer fund (some recommend 1-3% of the home’s value in cash or available credit as emergency maintenance fund, or at least a few thousand dollars) for peace of mind.
As a general guideline, many experts suggest budgeting about 1.5% to 4% of the purchase price for closing costs (excluding the down payment). The wide range accounts for differences like whether you have to pay full land transfer tax (higher end of range) or you’re a first-time buyer with a rebate (lower end), and the price of the home (some costs are flat, others scale with price). For example, on a $500,000 home, 1.5% is $7,500 – which might roughly cover land transfer after rebate, legal, inspection, etc., for a first-time buyer. On a $800,000 home for a second-time buyer in Toronto, 4% is $32,000 – which might actually be needed given the double land transfer tax (~$24k alone) plus other fees.
At Turkin Mortgage, when we help you with pre-approval, we also go over estimated closing costs so you know what to expect. We want to make sure you’re not caught off guard. Part of our client-first service is ensuring you feel fully prepared, not just for the mortgage but for the whole home buying experience.
In summary, beyond your down payment, plan for the extras like tax, legal fees, and initial upkeep. If you budget wisely, the transition to homeownership will be smooth and free of financial surprises. And remember, once these one-time costs are paid, you’re left with the rewarding experience of owning your home and building equity over time – which makes it all worth it!
We hope this comprehensive guide has answered your questions about the income needed for a mortgage in Ontario and how to prepare for a successful home purchase. If you’re ready to take the next step or need further clarification on anything, Turkin Mortgage is here to help. Our mission is to make your home buying journey as easy, informed, and rewarding as possible – with better rates, expert advice, and a truly client-focused touch. Happy house hunting!
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