Do you dream of owning your own home? Is it getting harder and harder with each passing year to imagine living in your own home, as real estate prices continue to soar? And please don’t mention that house prices have recently come down in Vancouver. They’re still way beyond the reach of most of us hard-working, ordinary Canadians.

So, the question is: can you afford a home in Canada? That depends in large part on your salary and how expensive a home you wish to buy. But when you’re making the decision whether to buy a home in Canada you also have to take into account what you’re paying in rent. Because you’re going to be facing:

  • The cost of a down payment which we’ll assume is 20% of the purchase price
  • Any additional legal and administrative fees that you’ll have to pony up, and
  • Your monthly mortgage payments.

So, while you’ll be free of rental payments, you could end up paying more per month once you sign that mortgage and move into your own apartment or house. But here’s the thing, while salaries are fairly constant across Canada, living expenses and house prices are all over the place. As we mentioned here, in Canada’s larger and more expensive cities sometimes 2 salaries are not enough to meet your monthly living costs. If you’re struggling to meet your rent, how in the world are you going to handle a mortgage?

In other words, whether your mortgage payments end up being more than your rental payments or less than your rental payments often depends on where you live in Canada. What we’re going to do is run through 10 major Canadian cities and see where an average Canadian family with 2 income earners can afford to buy a home. And see what kinds of salaries they’ll have to earn to afford a mortgage. 

 

Vancouver, BC

Vancouver via https://pixabay.com/photos/vancouver-british-columbia-1768956/

[Public Domain]

Sorry to start with the most expensive city in Canada but things will get better as we move down the list. Trust us. So, what we did was to use the Canadian Real Estate Association (or CREA) to find average home prices in cities across Canada. We assume a 20% down payment because putting less money down is going to increase your monthly mortgage payment and will almost certainly involve you having to pay insurance against a default. Or something of the sort. Remember the 2008 mortgage crisis in the U.S? Where people put 5% down on a variable rate mortgage and lost their homes when rates went up? You don’t want that happening, do you?

For rental payments, we used Numbeo’s data for Canadian cities and for average salaries for an occupation we used Statistics Canada. We also used TD’s mortgage calculator with a 5-year variable rate. Yes, it’s higher than say a 3-year fixed rate. But again, we wanted to estimate the higher range. If you can meet these payments, you’ll be fine when rates eventually start rising. And they always do at some point. This data helps us answer some important questions:

  • How much can you save on a monthly basis in order to make a down payment?
  • How long will it take you to save up for that down payment?
  • What combined salary will the two of you have to earn to meet your mortgage payments?

So, let’s start with the data for Vancouver, which has by far the most expensive real estate in Canada.

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$1,008,400 $201,680 $4971 $3674 $1297
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$20,000 $1250 10 years 3% $202,100

So, if you want to shell out 1 million to buy a cozy, teeny-weeny, bungalow somewhere almost hip and cool in Vancouver you’re going to need to start out with at least $20,000 in savings and then keep saving $1250 every month for 10 years in order to get that down payment. Unfortunately, if house prices in Vancouver keep rising over the next 10 years at a similar rate to the past 10 years, you’ll have to settle for a much cheaper-and-smaller-than-average home. But at least you’ll be a homeowner.

Good. Once you’ve made the down payment and signed the mortgage and moved in, you now have 25 years (the amortization period we chose to keep monthly payments at a fairly affordable level) of mortgage payments to look forward to. Notice that monthly mortgage payments on an average Vancouver home exceed the rental payments on a 3-bedroom apartment by $1297. Wow. That’s almost identical to what you’ll have to save in order to put together a down payment over a period of 10 years. So, you’ll hopefully have developed a habit of socking away over twelve hundred loonies a month. Because you’re going to have to keep that habit going once you move into your new home.

Let’s add it all up and see how much money you and your spouse have to earn to both save for a down payment and then to meet those darn mortgage payments. Every. Single. Month. For. The. Next. Twenty. Five. Years. 

While we’re sticking with our fictional 3-person family, the fabulous Kumshars – Avid, Livid, and baby Priscilla – we use Numbeo’s monthly costs minus rent, for a 4-person family in Vancouver. Then we add rental payments on a 3-bedroom along with the monthly savings needed to make our down payment, adjusted upwards to ensure we also meet our monthly mortgage payments. Remember:

  • While saving for a down payment, Total Monthly Costs = Monthly Expenses + Rent + Monthly Savings
  • After signing a mortgage, Total Monthly Costs = Monthly Expenses + Mortgage Payments.

We use the more expensive of the two (usually rent + monthly savings) in order to calculate total monthly costs.

Then we compare that total to various salary combinations based on Statistics Canada’s averages for occupations in Canada, to see what combination of jobs are needed to afford a home in Vancouver.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4150 $3674 + $1250 $4971

$9121

Educational Occupation + Care Provider $5640 $3572 $9212

Guess what? You can buy a home in Vancouver. It will likely be a condo and may not even be a 3-bedroom one and may not be that close to Stanley Park or the shore, but it can be done! A teacher and a care provider earns you just enough at $9212. Any other salary combination that’s higher is a bonus. What it does mean is sticking to that all-important monthly savings plan of $1250. Either that or the Kumshars better hope their favourite aunt or their grandmother leaves them a nice inheritance. And they both have to have fairly well-paying jobs as can be seen from the various salary combo’s listed above. Even if one of the two has a senior management occupation that pays on average in Canada $7584 a month, it won’t be enough to meet their monthly budget of $9121.

Ok, so now understand how we arrive at our figures. Let’s head across the rest of Canada’s major cities in search of an affordable home!

 

Toronto, Ontario

Toronto via https://pixabay.com/photos/buildings-cn-tower-canada-colorful-2297210/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$789,100 $157,820 $3900 $3520 $380
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$15,000 $1000 10 years 3 % $160,330

Our second-most expensive city in terms of real estate is, of course, Toronto. But notice that rents are significantly cheaper than in Vancouver, as well the monthly mortgage on an average home in the city is much cheaper in Toronto. If you compare the monthly savings, you’ll need to get to the $157,820 down payment, it’s just under $1000 per month. That’s good news! It means that having disciplined yourself into setting aside $1000 a month in order to save up your down payment, you’ll actually be able to breathe a little easier when you move into your own home as your monthly total costs go down. So, what type of salary combo’s get you there?

Monthly Expenses Rent + Savings Mortgage Payments Total Mo’ly Cost
$4837 $3532 + $1000 $3900 $9369
Educational Occupation + Care Provider $5640 $3572 $9212
Educational Occupation + Middle Management (Retail) $5640 $5135 $10,775

There’s something a little odd going on in this table. Did you spot it?

Yes, monthly expenses in Toronto are about $700 more than in Vancouver, despite house prices being cheaper in T.O.  And rent is almost as expensive as in Vancouver. That means that your savings period is going to require a noticeably higher combined income than when you’re actually paying off your mortgage and living in your new home. In other words, your total monthly cost of $9369 is for when you’re saving up for your down payment. After you move into your home, your total monthly costs will go down to $8737, a drop of over $600. That means that the first salary combo (Education professional + Care Provider) won’t cut it during your saving-for-a-down-payment period but will do fine once you’re paying down your mortgage.

 

Victoria, BC

Victoria via https://pixabay.com/photos/british-columbia-parliament-victoria-481846/

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$690,200 $138,040 $3417 $2577 $840
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$10,000 $900 10 years 3% $139,575

Because house prices are a little lower in Victoria compared to Toronto, and noticeably lower compared to Vancouver, we can start with an initial savings of $10,000 and save $900 a month to get to our down payment of $138,040 with around a thousand dollars to spare.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4019 $2577 + 900 $3417 $7496
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500

Victoria is not a cheap city by any means, but unlike Toronto or Vancouver, your total monthly costs allow one of the spouses to have a lower-paying job, as shown by our spousal salary combo: Nursing Occupation + Service Representative/Customer Service. As well, your total monthly costs are almost identical whether you’re renting and saving up for a down payment or paying off your monthly mortgage bill.

 

Kingston, Ontario

Kingston via https://pixabay.com/photos/marina-harbor-kingston-ontario-379618/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$415,435 $83,087 $2068 $2075 (-$7)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

Why in the world is Kingston fourth on our list?! Because house prices have skyrocketed in one of the country’s nicest cities and are now ahead of average house prices in Calgary, as well as ahead of those in Ottawa and Montreal, if not in Toronto. And if you know anything about Canadian geography, you know that Kingston is a reasonable drive from 3 of those cities as well as a short drive down the 401 to the last American exit. It seems people with portable jobs are leaving Toronto for the calmer environs of Canada’s limestone city. But even if homes are far more costly in Kingston than they were a decade or so ago, they’re within reach of many if not most working couples with a child to take care of.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3820 $2075 + $550 $2068 $6445
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care Provider + Service Representative $3572 $2972 $6544

What’s the main difference between your financial planning needs if you buy a home in Kingston compared to Victoria? It’s not just your job possibilities, seeing that both of you can earn below $4K a month although one of you has to earn at least $3.5K. It’s also the fact that your down payment is almost $55,000 less in Kingston. That means monthly savings of $550 will get you your down payment within 10 years. Or you could save a similar monthly amount to Victoria and get there in less than 7 years. It’s the sort of options that suddenly become available when average home prices are below half a million dollars. Additionally, once you sign the mortgage, your total monthly costs go down by about $500.

 

Ottawa, Ontario

Ottawa via https://pixabay.com/photos/ottawa-canada-city-urban-skyline-1863754/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$411,600 $82,320 $2050 $2159 (-$109)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

As with Kingston, a savings plan of $550 in Ottawa will get you to your down payment in 10 years’ time. Or you can save around $900 and get there in 7 years. But that means your monthly costs go up by almost $400. The job possibilities are similar as well, with one spouse able to work at a lower-paying job and still contribute enough to meet total monthly costs as shown below. However, one of the wage-earners would have to earn around 5K a month to pay the bills.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4,068 $2159 + 550 $2050 $6777
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative Customer Service $5528 $2972 $8500

 

Calgary, Alberta

Calgary via https://pixabay.com/photos/calgary-canada-downtown-cities-70848/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$411,100 $82,220 $2047 $2055 (-$8)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $550 10 years 3% $83,796

Home prices in Calgary, on average, are almost identical to those in Ottawa. So, the savings plan is the same as Ottawa’s and Kingston’s: start with $5K and tuck away $550 for 10 years and you have a down payment ready to go. Now rents are a little cheaper in Calgary so total monthly costs are just a touch lower as we show below.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3,992 $2055 + $550 $2047 $6597
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500

As one can see, Calgary’s total monthly cost is a little more than Kingston’s but slightly less than Ottawa’s. The 3 cities form a cluster with remarkably similar costs so the same job combo that works in Kingston or Ottawa, is going to work in Calgary as well.

 

Montreal, Quebec

Montreal via https://pixabay.com/photos/montreal-city-building-cityscape-506130/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$360,900 $72,180 $1800 $2056 ($256)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $475 10 years 3% $73,290
$10,000 $425 10 years 3% $73,032
$10,000 $950 5 years 3% $73,184

With Montreal we now have the possibility of saving up for the down payment within 5 years if we choose to do so. It means taking on a monthly savings of $900 rather than $475 or $425 and it means starting with $10K instead of $5K. But it can be done. What kind of job combos work out? Let’s see.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3,696 $2056 + $475 $1800 $6227
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/Customer Service $3572 $2972 $6544

Neither spouse has to earn close to $5K per month if they stick to a 10-year down payment savings plan. That means that it’s easier to find two jobs that will allow you – with a whole lot of patience and discipline – to buy your own home. Montreal is the first city on our list where that becomes possible. In addition, your total monthly costs go down by around $700 when you make the down payment and sign the mortgage.

 

Edmonton, Alberta

Edmonton via https://pixabay.com/photos/edmonton-canada-city-cities-77798/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$320,900 $64,180 $1600 $1908 (-$308)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $420 10 years 3% $65,585
$10,000 $370 10 years 3% $65,327
$10,000 $825 5 years 3% $65,083

As with Montreal, Edmonton opens up more options for a 2-income family to save enough for a down payment. For $825 a month of savings they can have their down payment saved up in 5 years and be moving into their new home. What kind of jobs will get them there?

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$4,006 $1908 + $420 $1600 $6334
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/customer service $3572 $2972 $6544

In Edmonton notice that just like in Montreal, you save about $700 in your total monthly costs when you sign the mortgage. Also, a working couple with a child have more than a few possible job combos that get them into their own home. Note that the 2nd lowest earning combo (Care Provider + Service Rep) gets them there. If they both work as service representatives then they’ll be a few hundred dollars short, so we left that job combo out.  We’ve come a ways form Vancouver’s tough-but-not-impossible housing market. Let’s see where we go from here.

 

Halifax, Nova Scotia

Halifax via https://pixabay.com/photos/halifax-nova-scotia-waterfront-2370263/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$315,313 $63,062 $1572 $1879 (-$307)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $420 10 years 3% $65,585
$10,000 $370 10 years 3% $65,327
$10,000 $825 5 years 3% $65,083

Halifax is almost identical to Edmonton when it comes to home affordability. Homes are just a few thousand dollars cheaper in Halifax and mortgage and rental payments are slightly lower. So naturally, the same options exist for saving up for that down payment. Whether jobs are as plentiful in Halifax as in Edmonton is up for debate. Both have fairly healthy local economies, if not on the scale of Montreal or Calgary, for example. Let’s see what job combo’s work in Halifax.

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3935 $1879 + $420 $1572 $6234
Education Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Service Representative/Customer Service $5528 $2972 $8500
Care provider + Service Representative/customer service $3572 $2972 $6544

Once again, your monthly costs drop by $700 after you sign the mortgage. Furthermore, the job combinations in Halifax are nearly identical to Edmonton. Unless both spouses work as customer service reps, they’ll be able to save up for a down payment and afford a 25-year mortgage on an average home. And remember, if they work at any job combo other than combo #7, they might be able to save up and take out a mortgage on a larger-than-average home. That’s a possibility that only really comes into being in cities like Edmonton and Halifax, and not the other cities we’ve already listed.

 

Winnipeg, Manitoba

Winnipeg via https://pixabay.com/photos/winnipeg-canada-night-evening-76909/

[Public Domain]

Average Home Price 20% Down Payment Monthly Mortgage Payment Rent 3-bedroom Mortgage Minus Rent
$314,081 $62,816 $1566 $1489 (-77)
Initial Savings Monthly savings Period of Savings Interest rate Compound Savings (10 years)
$5000 $400 10 years 3% $62,783
$10,000 $355 10 years 3% $63,255
$10,000 $790 5 years 3% $62,815

Notice how much easier it is to save up for a down payment in a city like Winnipeg. If you can start off with $10,000 in savings, for example, then all you need to do between the two working parents is to save $790 a month. If you invest it at a quite reasonable 3% rate - you’ll have to diversify your investments a little but solid bonds and a few reliable dividend stocks and you can easily achieve this rate of return - then in 5 years you’ll have your down payment and be ready to move into your own home. What kind of job combinations do the trick?

Monthly Expenses Rent + Savings Mortgage Payments Total Monthly Cost
$3484 $1489 + $400 $1566 $5373
Educational Occupation + Care Provider $5640 $3572 $9212
Nursing Occupation + Customer Service Representative $5528 $2972 $8500
Care provider + Service Representative $3572 $2972 $6544
SERVICE REPRESENTATIVE + SERVICE REPRESENTATIVE $2972 $2972 $5944

Welcome to the city that lets 2 customer service representatives earn enough to buy a home! It also holds true that if one spouse has a pretty good job, like an education professional or a nurse, then a family can just about get by without the other spouse having to work.

The reason we can do this is not because homes in Winnipeg are that much cheaper than in Halifax or Edmonton. It’s because the cost of living in Winnipeg is noticeably cheaper than the other two cities, whereas average home prices are within a few thousand dollars of each other in all three cities. And that includes rent which on average is around $400 cheaper in Winnipeg than in Halifax or Edmonton. In other words, between the cost of living and rent you save almost a thousand dollars by living in Winnipeg. Does that make 30 below without factoring in wind chill sound a little more bearable?

 

So, as you can see, there are cities in Canada where you can still very much save up and buy a home. Sometimes with both spouses working at less-than-spectacular jobs. Or, in the case of Winnipeg, only one spouse working at a fairly well-paying job. And there are cheaper cities yet in Canada. You just have to be willing to move a little off the well-trodden Vancouver-Calgary-Toronto-Montreal path that most immigrants choose when settling in Canada.

So, it helps to know a little about where it’s easiest to buy a home when you’re considering which province in Canada to settle in. Remember a little planning can go a long way when you’re looking to buy a home in Canada.


Category: 

Immigroup.com/news is independently run and does not seek editorial input from IMMIgroup Inc. The views of the authors of content on immigroup.com/news do not reflect the views of the consultants employed by IMMIgroup Inc.

"All images on immigroup.com are CC licensed, public domain or the work of IMMIgroup employees. If you see your image on immigroup.com and it has not been CC licensed, please contact us immediately at [email protected] so we can take it down."