How Much House Can You Afford in Canada in 2025?

With home prices and mortgage rules constantly evolving, many Canadians are asking about affordability. So How much house can you afford in Canada in 2025? Whether you’re a first-time buyer or re-entering the market, this post will walk you through what lenders look for—and how to calculate your budget with confidence.

Step 1: Understand How Lenders Calculate Affordability

Canadian lenders use two key ratios:

Gross Debt Service (GDS) Ratio – Maximum 39% of your gross monthly income can go toward housing expenses: mortgage payment, property taxes, heating, and 50% of condo fees.
Total Debt Service (TDS) Ratio – Maximum 44% of your gross monthly income can go toward all monthly debt payments, including car loans, credit cards, and housing expenses.

Most lenders use the lower of the two to determine your limit.

How It Breaks Down by Income (2025 Estimates)

Here’s a rough guide based on average interest rates and a 25-year amortization with 5% down payment (minimum required for homes under $500,000 and does NOT include property tax and house insurance expenses):

Household Income	Affordable Home Price	Monthly Mortgage (est.)
$80,000	~$420,000	$2,300–$2,600
$100,000	~$500,000	$2,800–$3,100
$120,000	~$590,000	$3,000–$3,600
$150,000	~$725,000	$3,800–$4,500
$180,000	~$850,000	$4,500–$5,000

These estimates assume:

A 5.5% interest rate (typical in mid-2025)
No major debts

Tip: If you carry debt (car loans, student loans, credit card balances), your buying power drops. Always factor that in.

What About the Stress Test?

Even if you qualify for a mortgage at 5.5%, you must prove you can afford it at the higher of:

5.25% (minimum qualifying rate), or
Your offered rate + 2% (so, often 7.39% or more)

This test significantly affects how much you can borrow.

Real-World Example: Dual-Income Buyers

Let’s say you and your partner earn a combined $140,000 per year. You have $30,000 saved and minimal debt. Here’s what might be possible:

Max Purchase Price: ~$700,000
Down Payment (5%): $35,000
Monthly Payments: ~$4,200 all-in (mortgage, taxes, insurance)

This might get you a detached house, town home or semi-attached outside the GTA in smaller cities like Barrie, London, Peterborough or in areas like Edmonton or Airdrie in Alberta.

Next Steps: Calculate Your Home Budget

Here’s a step-by-step checklist to determine how much house you can afford in Canada in 2025:

✅ Calculate your gross household income
✅ Add up your monthly debt payments
✅ Determine your down payment
✅ Estimate property taxes and insurance
✅ Use a mortgage affordability calculator (dont forget to factor in closing costs which could be 1-3% of the purchase price (click here for one we really trust and like)
✅ Speak to a mortgage specialist or Rent-to-Own expert

Final Thoughts

In 2025, affordability isn’t just about income—it’s about planning smart. The average Canadian household may not be able to buy their dream home yet, but with a plan (and the right support), they can get into the market.

Want help creating your personalized Home Affordability Plan?
We’ll show you how to get into homeownership without stretching the budget or your stress. [See if you pre-qualify today]

How Much House Can You Afford in Canada in 2025?