How Much Mortgage Can I Afford in BC?
Buying a home often starts with one big question: how much can I actually afford?
An online mortgage calculator can give you a starting point, but your actual mortgage qualification depends on more than just your income. Your down payment, existing debts, credit, property taxes, strata fees and the property itself can all affect the numbers.
And there's another piece I think is just as important: what you qualify for and what you feel comfortable spending aren't necessarily the same thing.
How do lenders determine what I can afford?
Lenders look at how much of your income will go toward your housing costs and your other debts.
Your mortgage payment is part of that calculation, along with things like property taxes, heating costs and, when applicable, strata fees. Existing obligations such as car loans, lines of credit and credit cards are considered too.
You'll also generally need to qualify using Canada's mortgage stress test, which means your qualification may be based on a higher interest rate than the rate you'll actually pay.
This is why two people with the same income can end up qualifying for very different mortgage amounts.
How does my down payment affect my mortgage?
Your down payment affects how much you need to borrow and what mortgage options are available to you.
The minimum down payment required in Canada varies based on the purchase price, and mortgages with less than 20% down will generally require mortgage default insurance.
Rather than looking at your down payment and mortgage separately, I like to look at how the two work together to determine a comfortable overall purchase price.
Can debt affect how much mortgage I qualify for?
Yes. Car loans, student loans, credit cards, lines of credit and other obligations can reduce your borrowing capacity.
If you're planning to buy, it can be helpful to look at this before you start house hunting. Sometimes relatively small changes can affect how an application looks to a lender.
What should my actual budget be?
This is the part that matters most to me:
The maximum mortgage you qualify for doesn't have to be the mortgage you take.
A lender can determine whether your application meets its guidelines, but it doesn't know how you want the rest of your life to look.
Maybe travel is important to you. Maybe you're planning a parental leave. Maybe you'd rather have extra room in your monthly budget.
So when I work through affordability with a client, we're really answering two questions:
What can you qualify for?
And what feels comfortable for you?
A good mortgage plan considers both.
Should I get pre-approved?
If you're seriously considering buying, a pre-approval is a great place to start.
It gives us an opportunity to look at your income, down payment, debts and credit before you've fallen in love with a particular home — and establish a price range you can shop within confidently.
Thinking about buying a home in BC?
I can help you work through the numbers and understand what your options look like before you start shopping.
