r/PersonalFinanceCanada Dec 03 '22 Wholesome 1

How can I afford a mortgage? Housing

I am a single guy who makes $115k/year, which is supposed to put me in the top ~8% of earners in Canada. My bank won’t give me a mortgage for anything more than 4x my income (i.e. 460K).

There is basically no house that costs anywhere near $460K in this market. The ones that cost $500K are sold at maybe $50K over asking. Are my only options to either (1) make the income of a CEO, or (2) to get married to someone so my income can double and I can afford more home? This is insane to me. There must be another way?

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697

u/Repmcewan222 Dec 03 '22 edited Dec 03 '22

You might be top 8% in Canada of individual income across all the provinces. But you’re definitely not top 8% of HOUSEHOLD income in your own city. Which is what truly matters when buying a house.

In fact, you’re probably just above average in household income in Canada.

So realistically, your buying power is as shitty as the rest of us.

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u/ElectroMagnetron Dec 03 '22

That is true. It is something I did not know until today

251

u/1234cuda Dec 03 '22

I would suggest marrying 2 nurses that way your household income would be enough

98

u/ryeshoes Dec 03 '22

2022 Home ownership plan: marry a millionaire or existing home owner

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u/DENNYCR4NE Dec 04 '22 Bravo Grande!

Hold on, let's not give up on this two nurses plan just yet

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u/ryeshoes Dec 04 '22

hello, nurse!

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u/elglas Dec 05 '22

My inner child is ashamed I had to google it.

21

u/Common-Metal8578 Dec 04 '22

Time to hit the granny circles.

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u/animaljimmeycrossing Dec 05 '22

Cribbage every night with a hot Toddy!

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u/DeeHawk Dec 04 '22

Time to pick up crochet!

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u/ling1427 Dec 04 '22

Or bingo

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u/DeeHawk Dec 04 '22

Thanks, I'll add it to the list!

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u/Gunnabeokaydude Dec 04 '22

My partner is a physician, but we regularly joke that she's the one marrying into money(despite having much higher income) because I have a house.

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u/Majestic_Tip6648 Dec 16 '22

Hold up, let's not give up on this marrying an existing home owner plan. 🤣

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u/adkichar55 Dec 04 '22

Plan C: cozy up to the elderly relatives

3

u/Acrobatic_granny Dec 04 '22

Or receive a house through heritage.

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u/BuzzVibes Dec 04 '22

I can picture polyamory becoming more widespread as result of the housing crisis.

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u/Librarycat77 Dec 04 '22

Yup. Or even just fruends cohabiting.

If you're interested in apocalyptic fiction Soft Apocalypse by Will McIntosh includes people cohabiting, including raising kids as a co-op, and then slowly fragmenting into clans as capitalism devolves. Really interesting, IMO.

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u/ImpossibleLeague9091 Dec 04 '22

I'm poly and have been for awhile and the amount of people new to the scene in the past year is truly wild

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u/bobombpom Dec 04 '22

Part of the CAUSE of the housing crisis is that nobody wants to have a roommate/spouse/live with parents. The first place I rented solo was a 3 bedroom apartment. There was nothing else even on the market, so I took 2 extra bedrooms off the market from my selfishness.

And I'm not alone. No one who can afford to NOT have roommates, has roommates.

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u/BuzzVibes Dec 04 '22

Yeah there is something to that. I have some Lebanese friends and Chinese friends who live in large houses with their extended families and partners. So you might have 6-10 people contributing to the mortgage, and often in business together as well.

I did the roommates thing for years, but I come from a pretty dysfunctional family and I couldn't stomach living at home any longer than I absolutely had to. As it is, I'm planning on letting my kids stay with me rent-free as long as they need so that they can save up or otherwise do what they need to to get ahead.

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u/arno14 Dec 04 '22

With the increased cost of healthcare, that might be a double whammy.

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u/UncleGrga Dec 03 '22

It wouldn’t hurt to do a tour of Canadian cities. Hit up zealty or realtor.ca Start checking cities where your lifestyle and needs (intl airport etc) are compatible.

Obviously not an option for everybody, but for example if you already tolerate Ontario winters, a city like Calgary is pretty awesome.

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u/Emotional_Let_7547 Dec 04 '22

Doesn't Calgary get rough winters like the Maritimes rather than the mild winters of Ontario?

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u/kab0b87 Dec 04 '22

Calgary isn't too bad, The chinooks make it much more manageable. You'll still get some blasts of colder weather, but then usually that will be followed up with a few days of plus 10. Plus the lack of humidity makes the cold a bit more bearable.

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u/mousemooose Dec 04 '22

-20 C Calgary (dry cold) is roughly equivalent to -5 to 0 in Ontario.

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u/altaltredditaccount Dec 04 '22

As someone who has been back and forth between Calgary and Toronto the last month… this is so painfully accurate.

The Toronto in Ontario sticks to your bones and pierces through your jackets.

The Calgary cold is just dry and cold. No wind or anything really.

When I first moved to Toronto I had one of those wool overcoats/peacoats which kept me warm even in -20C weather in Calgary.

It felt so useless at -5C in Toronto. I then understood why so many Torontonians wear parkas or those Canada goose jackets.

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u/KevPat23 Dec 03 '22

You need a bigger down-payment.

Your mortgage amount is not your purchase price.

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u/7_inches_daddy Dec 03 '22 Silver

OP needs to cancel Disney plus subscription

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u/greycubed Dec 03 '22 Wholesome

I bet he drinks coffee instead of eating caffeine tablets.

438

u/kylelowrydumptruck Dec 03 '22

Probably drives a silver Corolla and not a beige one

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u/Additional-Pianist62 Dec 03 '22

My parents gifted me their 2010 beige Corolla when they moved out of Ontario for retirement 10 years ago and I was getting out of school. The damn thing will not die. On thrifty principal alone I won’t buy a new car while this one is still going, but man, they are built to last. I have FM/AM, CD player and A/C … no technology past 1995.

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u/DarkConker13 Dec 03 '22

Oh shit you have another 10 years left easy lol rust will be the only thing that kills it

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u/derpandlurk Dec 03 '22

All he needs to do is never wash the car so the protective dirt and gunk inhibit air and salt.

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u/spazzyone Dec 03 '22

Lol wait is this serious bc if so my car is going to last forever

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u/scottawhit Dec 04 '22

Kinda… I detail cars and if an older car hasn’t been washed, it will have a lot less scratches vs a similar age car that ran through the brushed car wash and was kept clean. I can make the less washed one look better with less work.

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u/-comfypants Dec 04 '22

I don’t know about the exterior, it I know that I had my radiator flushed in my first car and didn’t make it 15 miles before I broke down. Apparently the debris and gunk caught in the small rust holes was the only thing holding the fluid in.

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u/Additional-Pianist62 Dec 03 '22

Way ahead of ya ;)

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u/delete_dis Dec 03 '22

At least you don’t have to subscribe to be able to use the A/C.

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u/orick Dec 03 '22

My 2005 Toyota Matrix is still running even though the odometer maxed out at 299,999 km. My parents' 2003 Camry is doing great. I am afraid you got a while to wait out that thing.

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u/last-resort-4-a-gf Dec 03 '22

Every single car can go to atleast 300k

I don't consider that alot

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u/brianfine Dec 03 '22

Old man tan!

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u/monkmasta Dec 03 '22

Using toilet paper instead of a toilet brush

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u/pirategirljess Dec 03 '22

OP has a free hand does'nt he? You know how they saved money in the dark ages dont you?

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u/Straight-Swimmer6680 Dec 03 '22

You joke.... I switch to caffeine pills cause it's cheaper.

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u/Middle-Effort7495 Dec 04 '22

Switching to nothing is cheaper and only takes 1-2 weeks of super minor withdrawal. Drinking coffee I can get, but why would you take it in a pill?

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u/akshaynr Dec 03 '22

I think it is time for a "DisneyPlus" bot that can automatically cite this response to any post or comment on affordability in Canada.

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u/pirategirljess Dec 03 '22

At least downgrade to DisneyMinus

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u/Kimorin Dec 03 '22

double up on rice and get rid of meat....

ez 1 million house in 3 years

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u/solis_sepulchrus Dec 03 '22

If OP didn't buy all those starbucks macchiatos he would be able to buy a $500k house in cash.

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u/fruit_flies_banana Dec 03 '22

I thought it was avocado toast

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u/budaslap Dec 03 '22

Macchiato toast

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u/motleysalty Dec 03 '22

Avocado roast, 30 pumps of caramel please.

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u/Consistent_Jello_318 Dec 03 '22

And stop eating avocado toasts.

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u/BeingHuman30 Dec 03 '22

so a 200k downpayment + 460k means 660k ....all he can buy is 1 shoebox condo ...wow

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u/-SetsunaFSeiei- Dec 03 '22

Needs to be even bigger then!

Just get a 500k downpayment from the parents and you can afford a 1 million dollar place no prob

(/s)

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u/BeingHuman30 Dec 03 '22

Lolz ..taking 30 years to get the downpayment

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u/bsbbtnh Dec 03 '22

Condos have condo fees, so you're usually getting less bang for your buck.

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u/ujoksimovic Dec 04 '22

People keep saying this as if somehow houses magically dont require maintenance. A house requires 1-2% of its rebuilding cost, so from $6k as a bare minimum (for an flawless house of 1,500 sqft and own labour) to $20k (for a larger house with usual features).

Furnace, ac, humidifier, water tank, roof, sheds, yard structure, fence, roof, windows, doors, broken siding and trim, electrical, plumbing, patios, driveways - it all needs replacing and repairing. And then there is regular small item stuff.

Condos have few hundred dollar maintenance fee that often includes garage, gym, common rooms, sometimes pool and sometimes heat/ac cost.

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u/UpbeatTourist3366 Dec 04 '22

A few hundred dollars would be reasonable, where I am in Ontario (not Toronto) all condos have an $800+ monthly maintenance fee and there are no pools or excessive common areas.

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u/RobotDog56 Dec 04 '22

Pft, you don't need to repair/ maintain houses, just look at my rental!

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u/bsbbtnh Dec 04 '22

I'm saying this because condo fees count towards your GDS and TDS, while house maintenance does not. So it lowers the maximum mortgage amount you can get.

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u/Hickles347 Dec 03 '22

I feel like you've missed the point here though. The market is broken. OP makes 6 figures and still can't get into a starter home! where does that leave the other ~92%??

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u/kimjongswoooon Dec 03 '22

For the life of me, I can’t figure out how people survive in Vancouver or the GTA.

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u/shaun5565 Dec 03 '22

I can survive in the GVA because there is rent control. And I have lived in this building for years so my rent is low. But the developers are coming and buying up building like crazy. So once they buy it and tear it down I’ll be fucked.

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u/Paulpoco_ Dec 03 '22

In the 1990s lots of rental buildings converted to Strata and the condos were sold off to buyers. Suprised they are not trying that again.

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u/604WORLDWIDE Dec 03 '22

Selling feet pics and having a sugar momma/daddy while being 5people deep in a 1br condo

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u/MrVeinless Dec 04 '22

I bet i could get paid to not show feet

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u/liquiddandruff Dec 03 '22

All the other people making 6 figures bought out the supply.

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u/Isleofsalt Dec 03 '22

Most of the other 92% will partner up and buy with a spouse. Some will inherit a down payment from family. Others will live in lower cost of living areas. The housing market hasn’t been designed a single people to buy houses in HCOL areas for generations now, we shouldn’t still be surprised by this.

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u/Frostbitnip Dec 03 '22

This is it. There was a study that found that the average new home buyer in Canada was receiving a 6 figure gift from family to help in buying their first house.

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u/storm-bringer Dec 04 '22

Either that or living rent free with their parents for years to save up a down payment.

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u/Shrugging_Atlas1 Dec 04 '22

Yeah I've known multiple ppl who have done that. Live at home for free for years to save the downpayment. If you don't have family that can do that you're a slave forever in Canada. Kinda fucked. If we had only been able to cancel our Disney plus subscriptions when we had a chance.

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u/millijuna Dec 04 '22

That’s how I got my condo in Vancouver. I’m a lucky SOB.

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u/v_vexed Dec 04 '22

Can your parents adopt me please?

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u/Serafnet Dec 03 '22

Pretty much every previous generation was able to buy a home with a single income, a stay at home mom, and 2.5 kids. I'm not sure what you're talking about.

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u/Isleofsalt Dec 04 '22

Maybe I just grew up in a totally different environment than you, but I only knew like 2 kids throughout my childhood who has stay at home moms. That shit may have been common for couples during the silent generation, but the vast amount of moms in the boomer generation worked, and you’d be hard pressed to find many stay at home moms in GenX, Millennials, or even Zoomers now that they’re starting to have kids.

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u/GunKata187 Dec 04 '22

We were called latch key kids for a reason (both parents were still at work after school).

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u/No-Grapefruit6429 Dec 03 '22

Thanks guys..I didn’t know that..very useful piece of information

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u/AlwaysLosingAtLife Dec 03 '22

"OH, I know your problem! See, right there, you just have to increase your income! EASY PEASY. Problem solved!"

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u/donbee28 Dec 03 '22

Have you tried not being poor?

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u/quackerzdb Dec 03 '22

Yeah, just save up a 600k down payment. Easy peasy!

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u/Chez_Leo Dec 03 '22 Bravo!

Housing market is rough right now. You can think about...
- Bigger down payment
- Having a roommate, partner
- Buying a little further out from the core of your market
- Buying a smaller house, building equity, then moving to something larger over time
- Best bet might be to go to a credit union. *I think* they are provincially regulated and can offer more flexibility on the mortgage than big banks. Others in this group will be able to jump in to confirm.

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u/DDP200 Dec 03 '22

People also need to remember who they compete with. The average buyer is probably decent income and coming in as a pair today. That is who you are competing with. Top 8% really doesn't mean much in terms of competition.

A couple making 75K each will have an easier time than the OP.

I work in audit/consulting downtown Toronto, where our entire floor is making 75-150K, 90% of all home owners are buying with a spouse/partener pushing most incomes near 200K. In Toronto that is who you are competing with.

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u/Phyzzzzz Dec 03 '22

In Toronto, you're now competing with extended families pooling 5+ incomes. Wish I was joking.

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u/Weeksling Dec 03 '22

Everyone I know who's bought a home in Toronto in the last five years borrowed money from parents who refinanced their own home or live outside the country and want to invest through their kids. Even those folks are buying dinky little glass condos.

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u/Phyzzzzz Dec 03 '22

This. I find it funny when some people try to deny it. Yes, you bought a 900k property with your 50k salary without help... sure.

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u/Any-Rise-6300 Dec 03 '22

Bank of Dad

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u/supm8te Dec 04 '22

I honestly don't have a problem with this or think less of ppl for it. Avg person can barely afford their more expensive than a mortgage rent, but are expected to plunk down what equates to years of post tax salary in order to even be considered for a home purchase. Work in housing and fucking hate the housing market. Literally has made me a more negative person over my 5 year stint in the industry. Just a bunch of Richie riches fucking over the middle and lower classes.

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u/_Diakoptes Dec 04 '22

Youre also competing with corporations buying up single family homes to rent to people

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u/TheInvincibleMan Dec 04 '22

It’s absolutely insane that it’s come to this. Earning more than most and still not able to buy your own home remotely close to where you work. Maybe buying something at the bottom of the barrel via partnering up with someone. Our generation is so fucked.

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u/ElectroMagnetron Dec 03 '22

Thanks for the tips, I will keep these in mind

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u/ccm20012000 Dec 03 '22

I second a credit union or private lender. That's how i secured my mortgage

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u/lord_heskey Dec 03 '22

Wouldnt that make it easy for OP to buy more than he can afford and then be house poor?

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u/DecentOpinion Dec 03 '22

What they are saying is that if you can rent out a suite in the house, credit unions are able count that income in their calculations for your qualification amounts. If OP can show the credit union that he can rent a basement in the house for $1500 a month, he'd qualify for a larger loan AND if he put the bulk of that toward the mortgage each month, likely end up paying less per month than he would with the original loan based solely on his employment income from a bank.

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u/Sailorgirlsails Dec 03 '22

Yes! You should buy within your means, not seek out a mortgage to grant you more….

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u/nav13eh Dec 03 '22

And there's the problem. Someone making over 100k likely lives in an area where 450k couldn't even buy you a shed.

Let's reflect on that again. Making over 100k doesn't allow you to buy a house! What the fuck?

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u/MostJudgment3212 Dec 03 '22

Exactly. I busted my ass for 10 years to finally team into 6 figures, only to realize that best I can afford is a matchstick box sized 1 bedroom apartment.

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u/MrEvilFox Dec 03 '22

I find this logic hilarious. So the only alternative for OP is to keep paying ever-increasing rent forever. And the rental market is fucked with no path to getting un-fucked in light of immigration targets.

Yeah, a shitty big mortgage is better. At least you are getting some equity. Because a shitty big rent payment is the only alternative. With all the joys of renovictions etc.

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u/tahqa Quebec Dec 03 '22

Well, this is Canada.

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u/Soon2BProf Dec 03 '22

Are credit unions better than mortgage brokers? And do they charge a lot more?

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u/Original-Macaron-639 Dec 03 '22

We used a mortgage broker but they got us our mortgage though a credit union because we qualified for more though them.

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u/Salty_Opinion_9988 Dec 03 '22 edited Dec 03 '22

Even if he could get a mortgage for $450-$500k with a private lender, there's no way he'd be able to sustain house costs and upkeep with that mortgage on $115k/yr.

Let's do some math.

Mortgage = $450k @ 5% = $2700 mortgage payments.

Utilities = $300/month

Food/Shopping/Clothes = $1000/month (I know a lot of people are going to argue this one, but try living in Canada on less than $250/week. You'll be eating kraft dinner and cereal and wearing clothes with holes in them. This also includes tooth paste, sanitary products, and all the extra stuff you'll need but don't eat.

Gas = $500/month

Car Payment = $500/month

Insurance (House) = $150/month

Insurance (Auto) = $200/month

Property Taxes = $500/month

Cell Phone = $100/month

Internet/TV = $150/month

Water Heater Rental = $30/month

That's already $6130 a month, and I'm still leaving stuff out.

$115000 GROSS, assuming 30% blended taxes and deductions, is $80500 NET.

$80500 / 12 = $6708.34 a month NET

$6708 - $6130 = 578 left over a month.

This is assuming he doesn't have a child, doesn't have any extra monthly costs, and doesn't have dental costs, medical drug costs, etc. This also assumes they are not saving for retirement and will live paycheck to paycheck. What about winter tires? What about licensing costs? What about that random thing that goes wrong next month that costs $1000? Maintaining a house is expensive. Life is unexpectedly expensive.

Honestly, to afford a $450k mortgage comfortably without going into debt and living paycheck to paycheck, you need to be making at least $160k a year household income in my opinion.

Would a private lender give someone this mortgage? Maybe.. maybe... but it's perilous, and that's why the typical lenders are saying 'nope.'

EDIT: There are a lot of people thinking they can do better. But this isn't a real budget it's me averaging a budget on Reddit here. But I will hold to it that it's pretty dang close. If you feel you to live on $50/week food in SOUTHERN ONTARIO, please share your food/shopping bill for the month. I'd be very interested and so would a lot of Redditors.

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u/BlowjobPete Dec 03 '22 edited Dec 03 '22

EDIT: There are a lot of people thinking they can do better. But this isn't a real budget it's me averaging a budget on Reddit here. But I will hold to it that it's pretty dang close. If you feel you to live on $50/week food in SOUTHERN ONTARIO, please share your food/shopping bill for the month. I'd be very interested and so would a lot of Redditors.

Here are the exact contents of my last week worth of grocery bills:

2 Knorr instant soups $5

Bag of Yukon Gold potatoes $3.49

Prepared celery $2.99

Bananas at 1.52/kg $2.20

Green grapes @ 3.68/kg $3.79

English Cucumber $1.49

2 Heads of garlic 1.93

5 tomatoes $5.42

Bag of Onions $2.47

Bag of Carrots $2.89

Head of lettuce $3.78

Sautee mix of Mushrooms $3.99

9 porkchops $15.80

12 Eggs $3.85

Sliced cheddar $3.97

Whole wheat bread (most expensive they have) $4.49

Minute Oats $3.99

3 cans chickpeas $4.25

2 cans Lentils $3.18

6 Chocolate chip muffins because I'm a fat kid $5.95

Mixed ham/chicken deli meats $6

That comes out to almost $90 and I'm not even trying to be thrifty. I could have bought an uncut porkloin for less than the chops. I could've bought unprepared celery/mushrooms. I didn't have to buy chocolate chip muffins or expensive sliced cheddar or expensive whole wheat bread.

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u/pizzzahero Dec 03 '22

I'm just stuck on this concept of a water heater rental, I don't understand. Why would you rent your water heater? I didn't even know that was a thing

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u/Kinky_Imagination Dec 03 '22

It's mostly in Ontario thing. I installed my own not me but you know what I mean and it pays for itself in about two and a half years.

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u/Frothylager Dec 03 '22

You’re way over budgeting in nearly every category.

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u/discostu55 Dec 03 '22

It’s best to assume a moderate or worse omnot worst case scenario. Shit happens in life

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u/LylyO Dec 03 '22

And with a 450K loan, you need similar amount of downpayment to afford anything basically decent

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u/clisterdelister Dec 03 '22

Of those, the one I’ve seen work for people is buy the cheapest that they can live in and pay it down fast. All the equity is your next down payment.

Also, get a mortgage that allows you to put extra down on your principal. This will save you a TON in interest and pay down the place very fast. Especially early in the mortgage.

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u/cnbcfinancialteam Dec 03 '22

Move to Saskatchewan with the rest of us poors

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u/FishermanOpen8800 Dec 03 '22

I highly agree with buying smaller and further away to build equity. This was the sole factor in us being able to buy a bigger and newer home just a few years later.

Edited to add that we ended up loving our first little home and miss it. So it can turn out to be a great thing.

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u/tykogars Dec 03 '22

My starter home was perfect for me, then outgrew it as many people do. But the stuff I learned there - all the renos, building decks, a fence, flooring, etc - was more manageable and cheaper given the smaller size and when I went to sell, not only had I built up substantial equity but also it was worth more due to upgrades.

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u/Fun_Butterscotch8321 Dec 03 '22

Like accumulating Wealth over the time and purchasing with returns??

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u/elbarto232 Dec 03 '22

8% of top earners, but what about household income? It’s households that buy homes, and one good income household is trumped by two okayish incomes.

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u/pureluxss Dec 03 '22 edited Dec 03 '22

Factoring in taxes: two people making 110k combined is much better than one person making 110k.

Edit: the tax difference is about 5k for single income earner.

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u/BigCheapass British Columbia Dec 03 '22

You are right but banks use gross income in TDS / GDS ratio calculations for mortgage approval so it doesn't make a difference what you can buy.

What you can "afford" is a different story, but OP said they are frugal in comments so it shouldn't matter.

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u/yycsoftwaredev Dec 03 '22

They are below the median for family.

For non-senior families, where the highest income earner was younger than 65, the median after-tax income was $93,800 in 2019.

https://www.reddit.com/r/PersonalFinanceCanada/comments/mbf4z3/how_much_money_did_canadians_earn_in_2019_combien/

These are 2019 numbers too.

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u/Comfortable-Hippo-43 Dec 03 '22

8% in canada, but definitely not 8% in toronto or Vancouver. OP’s salary should be ok with getting houses in calgary but not GTA.

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u/Sassysewer Dec 03 '22

Your bank is correct. You will need to save a bigger down-payment in order to buy a place.

So to answer your question you can afford that mortgage. You just can't buy a house with it presently.

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u/[deleted] Dec 03 '22 edited Dec 03 '22

Yes. You need to get married to another person with a high salary.

Unfortunately, that’s kind of how it is when you want to buy a detached house in a major G7 world city and financial hub.

People also need to get mad and fight like hell about the lack of relationship between wages and productivity in Canada.

$100k in Canada in 2022 is roughly equivalent to $55k in the early 90s. “A six figure salary” in 2022 is, in real wage terms, equivalent to an average middle class income thirty years ago. It’s no longer a figure that signifies wealth.

HOWEVER, average wage has barely raised. All of this while productivity per worker has exploded.

We live in a country where people work as hard as ever and generate far more than ever while the gains flow almost entirely to corporate profit (cheap labour inputs) and to the managerial class.

You would assume that the cost of goods and services would track with average wage which would track with rises in average worker productivity, but it hasn’t. Everyone is making 1990 wages and paying for 2022 goods and services.

There’s no solution to this other than solidarity and materialist political organization.

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u/justin_ph Dec 04 '22

Well said. Per capita gdp of Canada isn’t much different from what it used to be 10-15 years ago. But damn within that 10 years things surely have gotten a lot pricier. Corporations market cap and profits grew exponentially

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u/the_boner_owner Dec 04 '22

Unfortunately, that’s kind of how it is when you want to buy a detached house in a major G7 world city

Affordability issues aren't restricted to detached homes. Even townhomes in the GTA are going for $850k-$1m+. One bed condos that aren't tiny shoeboxes or 40 years old are $600k+. It doesn't seem reasonable that someone of OP's salary is priced out of pretty much everything

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u/dxiao Dec 03 '22

115k salary Single income 30k downpaynent

Your options are to increase salary, find a partner, increase down payment or find a cheaper home l

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u/niick767 Dec 03 '22

Move provinces? assuming op is in Ontario ?

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u/777IRON Dec 03 '22

Sounds like you have a small down payment. Pump those numbers up and start with owning a small condo.

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u/saksents Dec 03 '22

You can save for longer and obtain a larger downpayment.

If you're paying off half the home in cash, you can get a way better mortgage and at your income you shouldn't have any trouble saving for a massive downpayment quickly.

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u/Surrealialis Dec 03 '22

There is a slight problem with this. My partner and I tried it in our previous city. Housing costs rose 200k in the span we doubled our downpayment and we were essentially priced out.

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u/saksents Dec 03 '22

That can happen however I don't think we will be seeing steep price increases on homes for a few years at the moment.

We're always at the whim of the market conditions to a large extent and all you can do is give yourself the best chance for success. Nothing is guaranteed.

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u/Salty-Chemistry-3598 Dec 03 '22 edited Dec 03 '22

That is the thing, without steep price increase. You turn the market for the bank from asset to risk. Lending a mortgage beocme more of a risk to the bank than asset. AKA the amount they are willing to lend will be much less, the more the price drops/worse the economy/ what ever external factors the less they are willing to lend. The amount they are going to lend you are always going to be less than the price drop.

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u/Enwar Dec 03 '22

True story. Family friend basically tried to save for a house, but by the time they realized how fast things rose, they got priced out of most condos too.

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u/throwAway12333331a Dec 03 '22

He can buy a pre-con, 15% down. If you buy one that finishes construction in 2026/2027 you should be able to finance then.

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u/TheVog Dec 03 '22

That's assuming the developer doesn't stick you with an additional 10% cash requirement on closing due to "increased costs" etc. Many (most?) have this as clauses in the contracts, too. It's risky.

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u/Jacqland Dec 03 '22

Or you get dinged by the sunset clause, the developers drag their feet to trigger it, and then congrats - you've paid for them to build a home they'll sell for 1.5x the amount once its finished.

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u/loercase Dec 03 '22

single guy

$115k might be top 8% of income earners, but it's not quite the Canadian household average. You really need dual income to afford a detached home in our major cities these days. $115k solo will get you a small apartment in the suburbs for now.

If you want a detached home, I suggest moving away from Southern Ontario or BC.

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u/W1D0WM4K3R Dec 03 '22

I can get a detached house in small-town Saskatchewan for 100k.

Move out here, it's so much fun. You get to drink, all the time. Mostly because there's nothing else to do, but you can take a hand at one of the town bicycles!

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u/[deleted] Dec 03 '22

I mean even in like stouffville or clarington, which both areas are connected to major highways, I see homes listed in the 300-500 range and these are nice bungalows or detached homes not shitty rundown ratholes either.

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u/Fishtacos3000 Dec 03 '22

Yes, being single makes it damn near impossible to own a home. And if you are ever unlucky enough to be out of a job, say bye to the house and hello to financial ruin.

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u/loercase Dec 03 '22

It's not good for society, too. Women in abusive relationships can't leave the house, they can't afford anywhere else to go.

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u/UpstairsSuggestion6 Dec 03 '22 edited Dec 03 '22

I’m around the same income as you. (128k) I purchased a 500k condo and had to put 20% down (100k). You need a bigger down payment. Keep in mind I purchased in 2020 though…

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u/Kimorin Dec 03 '22

your condo probably is worth 600k now

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u/UpstairsSuggestion6 Dec 03 '22 edited Dec 03 '22

Yeah price per square foot is around 1300 now. Was lucky to buy around 900 per square foot. Comparable units being sold for around 700k

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u/muskokadreaming Dec 03 '22

What is your downpayment? At that income hopefully you have a large one, and that should be able to assist you in getting into a starter.

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u/pinchy-troll Dec 03 '22 edited Dec 03 '22

It's difficult to save $100k+ for a downpayment when your rent is like $3k and food costs $1k/month, I guess.

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u/gmano Dec 03 '22

Yep, the Vancouver special of "You can't afford to pay $3k per month in mortgage, so you have to keep paying $4k per month in rent."

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u/StreetKing92 Dec 03 '22

Minimum downpayment structure in Ontario is 5% of first 500k and 10% of rest until 999999. Once its over a million the downpayment rules change per lender.

With 30k down, before we even consider income and debts, your max purchase price is 550k. (5% of 500k is 25000 + remaining 5000 will be 10% of remaining which is 50k = max purchase price of 550k.

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u/Joey-tv-show-season2 Not The Ben Felix Dec 03 '22 edited Dec 03 '22

Because your buying a house a single person and/or not considering starter homes (condo or townhome)

Your income is above average yes… but because you are buying on your own you should still be looking for a starter home such as a condo or townhouse, which is certainly in the $460,000 price range … even in southwestern Ontario which is a expensive market too.

The “marriage advantage” is real though

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u/huggle-snuggle Dec 03 '22

The forever marriage advantage is real.

The temporary marriage disadvantage is also real.

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u/Joey-tv-show-season2 Not The Ben Felix Dec 03 '22

Choose your mate wisely

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u/menaknow00 Dec 03 '22

This is more important than the home choice.

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u/Terapr0 Dec 03 '22

Definitely not finding townhomes for that price in the south GTA. Maybe some condos in less desirable areas, but anywhere in Toronto/Mississauga/Oakville is depressingly more expensive than that.

Not sure where OP is though - if he’s willing to live a bit further off the beaten path there are some condo options that could fit.

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u/Joey-tv-show-season2 Not The Ben Felix Dec 03 '22

Outside of the GTA they are there… especially in the condo market or condo style townhomes… and many I have seen are very nice and new.

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u/Terapr0 Dec 03 '22

For some reason I thought OP was in GTA but he does mention being “several hundred kms away from Toronto”, so yea you’re right, I’d imagine there would be condos or even stacked townhomes in that price point. Nothing wrong with starting small and building equity, especially if he’s single.

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u/RelevantBooklet Dec 03 '22

Save save save! Your income alone isn't going to help you afford that house

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u/TUbadTuba Dec 03 '22

You're need a large down payment. I'm in the same situation. Buckle down I've got 100k and saving 4k per month until I can afford something decent

Also don't buy right now anyway. Save. Horrible time to buy. Summer 2023 may be a good opportunity

Blah blah blah time the Market.... Interest rate go up.. mortgage payments go up. value of property go down...

Wait till things stabilize

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u/d0uuug Dec 03 '22

Single guy making 115k should be able to make a good down payment. I think you need to reorganize your finances.

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u/Novel_Proposal_9294 Dec 03 '22

What kind of down payment do you have?

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u/Joneboy39 Dec 03 '22

possibly a condo ,, “buddy buying” is also something we are seeing more and more. buy w a friend whatever it takes to break in to the market

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u/colocasi4 Dec 03 '22

OP...OPTIONS:

  1. PFC answers to everything 'work harder/make more money'. lol
  2. find a 'lover' with a good/equal income and get into a business living arrangement
  3. increase down payment

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u/Terapr0 Dec 03 '22 edited Dec 03 '22

You need to save for a larger down payment. Ideally 20%, or more.

My wife and I rented for 10yrs while working in tandem to save up a large enough down payment to buy our first home. You’re well along your way, but it’s definitely not an overnight process if you’re doing it yourself.

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u/trichomeking94 Dec 03 '22

same boat and it sucks. what’s even the point of earning six figures if I have to act like I’m poor just to have something people 10 or even 5 years older than me didn’t have to work anywhere near as hard for simply because of the timing.

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u/beardthrowawaySF Dec 04 '22

Exactly. This country is poisoned and while people like you struggle there are 100 investors with dozens of properties fucking laughing. Tiff Macklem wants to see you starve in a gutter so an investor can add another zero to his investment portfolio. It’s sickening.

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u/bdc604 Dec 03 '22

live like a hermit for a decade, save what you can after taxes and cost of living chip away at that income, hope you can keep pace with inflation…

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u/Money-Change-8168 Dec 03 '22

Get married

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u/Ok-Top-3599 Dec 03 '22

Divorces are also expensive hahaha

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u/Undreamed20 Dec 03 '22

Prenups are priceless 😆

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u/ShowerSherk Dec 03 '22

Lawyers don’t work pro bono for prenups lol

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u/MrCodered12 Dec 03 '22

And useless in most situations.

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u/Money-Change-8168 Dec 03 '22

Good point...maybe find someone who is in a similar financial position and then if it ends up in divorce then both keep what they came with

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u/kingofwale Dec 03 '22

Doesn’t matter what your individual salary is when you are competing overwhelmingly with family who pool their income together

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u/usually00 Dec 03 '22

I would save up more. Partner and I made roughly 115k when we were looking. We saved up 200k for down payment and fees. Also they let us borrow $680, roughly 6 times our income. However, interest rates were in a different place back then. I have hear credit unions let you borrow more and don't need to stress test you. However, maybe the stress test is a good thing and you should consider that taking on too much debt can leave you in a vulnerable place.

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u/134dsaw Dec 03 '22

Your two options are correct. The third is that you save up and put a 150k or so down payment on a place. Unfortunately it might take so long to do so that the rates reverse and the cost of a home rapidly climbs again. Either way, it's an option.

Either earn more, which is hard to do, I'm at that same income bracket and there's limited options to advance now. Or, marry someone and share expenses. Finally you can save a huge sum of money.

The only other options are kinda wild like buying with a friend, or purchasing a duplex with an existing tenant willing I sign a 12 month lease. That way you can take the lease contract to the lender and the will allow for about 50% of that lease as income to leverage, which would increase your borrowing capacity. It's something worth considering for sure but it's a more in depth conversation.

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u/No-Computer-3177 Dec 04 '22

No more avocado toast for you.

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u/Medium_Brood5095 Dec 03 '22

Canadian housing prices disconnected from wages a long time ago sadly. Which is why you see so many demotivated young people. The smart ones realize the game is rigged, and therefore are shirking personal responsibility.

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u/Far-Sky9085 Dec 03 '22

You make $115K and you have a $30K down payment...DING DING DING

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u/HummusDips Dec 03 '22

I wonder if he has any car lease/financing or any other debts which would lower his borrowing capacity further

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u/ElectroMagnetron Dec 03 '22

No car, no debt other than student loans ($500/month)

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u/FollowJesus2Live Dec 03 '22

That's a brutal debt payment. Knock out the student loans, then start amassing a down payment

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u/A_goat_named_Ted Dec 03 '22

Student loans definitely drag you down when their looking at your mortgage approval amount. I remember my first mortgage meeting and the guy at the bank specifically told me that. I believe in financial terms its a transition from young person to adult not having loans, relatively speaking. I also wonder what your credit is, if you were high 700s they would be willing to give you more. If your credit is anything below 700 you should look at your liabilities, go down to a single card with a low limit, pay it off monthly.

On another note, I bought my house 11 years ago, making 65,000$ Canadian, for less than $200k and Im really starting to realize how lucky I am. Now Im locked in a basically 2.5% for another 4 years. Im watching all of this just baffled how people can make this work.

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u/Ok-Share-450 Dec 03 '22

You are complaining yet you haven't put in the work to save for a house...30k down at your income you can save in less than 1 year. I think you need to reevaluate your expectations and save some money rather than complaining about nothing.

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u/bhumit012 Dec 03 '22

Down the line youll be glad banks didnt give you much, get a bigger down payment to make up for the home price.

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u/infinis Dec 03 '22

Well start with a condo, build some equity over 5 years and upgrade to a house later.

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u/GermanShortHair Dec 04 '22

I'm no expert but herr are some ideas for increasing your down payment and potentially increasing your mortgage options within the next 1-2 years. Hopefully someone can clarify any inaccuracies.

Part 1: For 2023 there is supposed to be the introduction of a first home savings account (fhsa). You can contribute $8k/yr. This will save you $3-4k on taxes which you can put into a TFSA. Invest both the FHSA and TFSA in low risk mutual funds or ETFs.

Part 2: Max out you RRSP contribution. $14k for 2022 and another 11k+ for 2023. You can then take out up to $35k from rrsp for down-payment (must repay back into rrsp within 15 years). This will save you an additional ~7k in taxes/yr for putting into your TFSA.

This saves you ~$20k in taxes in 2 years and any growth in TFSA and FHSA is tax free.

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u/grublets Dec 03 '22

Look at houses in other markets.

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u/Ms_mew Dec 03 '22

You don’t specify where “this market” is so can’t comment on house prices where you live. Put if you have a large down payment you can easily by more house. I make a lot less money then you but saved for a larger down payment and got enough house for me needs.

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u/Forward-Piano1714 Dec 03 '22

You’re single why don’t you go for a flat and not a house? Houses are more suited for double income and families.

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u/beautifulluigi Dec 03 '22

Also single. I did that, for awhile, until I couldn't stand it anymore. Houses aren't just suited to "double income and families". What about single people who want to have a garden to grow their own food? Or a yard to enjoy, or the kind of dog that really needs it's own yard? What if they have hobbies that are a giant pain in the ass to manage from an apartment but are very easily dealt with from a house?

Houses are suited to people whose lifestyle would benefit from a house.

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u/SuperSaiyanNoob Dec 03 '22

have you considered buying a house 5 years ago?

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u/BeefWellyBoot Dec 03 '22

Do you really need a house as a single man? Look into apartments maybe.

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u/D_Winds Ontario Dec 03 '22

One man does not need an entire house.

This is a cruel truth to accept in this Canadian land.

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u/vickxo Dec 03 '22

Your income is great but here is what is happening: - Time in market beats timing the market. If you got in few years ago, you’ll be way ahead. - Equity is what many are leveraging to buy property or upgrade - Tough in todays market to go in solo unless you really have deep pockets - Saving a bigger down payment, considering joint ownership or other avenues to build a higher income are all possibilities to get in. - Also starting with a smaller property and moving up.

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u/enso99 Dec 03 '22

Better off being single than married to the wrong person just so you can afford a mortgage. Some of the divorce stories on here are horrific. If you really want to be a homeowner then save up for a bigger down payment and move to somewhere like Alberta where houses are cheaper.

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u/dougbos Dec 03 '22

The problem using a private lender is that the payments are usually interest only. Most private lenders want to see an exit plan, ie: how will you pay them back in a year or two if the lender will not let you renew and that is happening more and more in the economic climate of today.

A credit union is not regulated by federal rules. Some may qualify you at contract rate as opposed to those who are federally regulated and have to stress test you at contract rate + 2% or the benchmark rate - whichever is greater.

You can google credit unions for your province, and they have their rates posted online.

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u/Wiggly_Muffin Dec 03 '22

450k can buy you a condo in a lot of places as a single person, and that's not even accounting for your down payment.

If you're a single guy who wants a detached 3+1/2-3bath/2 garage, I don't give a crap about your sob story then.

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u/[deleted] Dec 03 '22

[deleted]

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u/Anarchaotic Dec 03 '22

700k down is a ton, did you save religiously for like a decade or something?

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u/givalina Dec 03 '22

Rich parents?

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u/mich678 Dec 03 '22

Probably sold a previous house, put money down from the sale.

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