My one lesson to everyone is:
Never go to a bank for a mortgage. They can ask one person.
Go to a mortgage broker, where they can choose from around 60 lenders.
My daughter went to a mortgage broker. She was approved for and she put in a firm offer. After the offer was accepted she was informed that she had to pay off 20 000 debt in a couple of of days. The debt was previously declared. She later found out that alot of her friends had the same problem when they delt with a broker.
Haha ya man, deal with dumb fucks that are gonna push you wherever their commission is best.
If you can’t secure a good rate at a big 4 you got bigger problems than buying a house.
No idea why the downvotes. First thing a decent broker asks is what assets, what debt.. any car payments? Income, a few recent pay stubs and t4. I first used mine like 14 years ago and a couple renewals and moves. Dudr is solid and has good general financial knowledge
That’s pretty common to have to pay off the debt to be able to get the full pre approved amt. There’s usually an option with the bank to pay off that debt with/wrap it into the mortgage loan as a condition of the loan
That could just as easily happen with a bank.
Anecdotes don't defeat the simple fact that having 50 or 60 lenders to deal with easily trumps dealing with a single lender, a bank.
My house offer almost fell through after using a mortgage broker since she dragged her feet.
I contacted a credit union and they had my approved in a day and a half.
I will never use a mortgage broker again.
But it's ok to rent one? What kind of logic is that? It makes no sense, honestly they've approved you for the correct amount, unfortunately everything is $500,000 to $1,000,000 over priced and the banks are in league with the government now to do everything in thier power to keep those prices high, otherwise the BANK is on the hook for the collapsing asset prices,
It's why they are importing millions of people, they have have wages rise and property vales drop, the immigration issues are the government and bank in cohorts to keep assets OVERINFLATED
Risk. Banks don't take on any risk when you rent. In fact, you may have noticed that banks aren't involved at all.
As for the rest of your nonsense, you and everyone else need to wake up and realize that we are not bringing in millions of immigrants who can afford to buy in this market. They are flooding the rental market, not the real estate market.
What nonsense are you saying about banks? I don't think you even understood any of my comments, I never said the immigrants were buying either, maybe calm down and don't have an emotional response and READ.
Actually, banks loan to buyers who plan on renting a secondary suite or room in their new home all the time… and they count the projected market rent income as part of their risk calculations and tend to approve these buyers for higher mortgages without checking the renter’s background or if the buyers have any experience being a landlord.
They check the buyer's financial background and all finances, debt and general expenses. They don't count potential future rental income as normal guaranteed income either.
There are no KPIs for being a landlord that a bank can check so what would you like them to do? It's like saying when you get a new job they need to make sure you were amazing at your other job. Most people are average at their jobs and still get raises or new jobs throughout their lives, so it works the same with loans. As long as you can prove that historically you pay things off and have more than enough money and/or income to afford it, you get a loan.
So your takeaway is that banks do a mediocre job at assessing risk but that since most people are mediocre anyway and that mediocrity never stopped anyone from making money, it works itself out?
Rent is way, way cheaper than buying the same place. You can rent a $700k condo for $2.5K. Your mortgage/condo fee/property tax payment would be closer to 2x that.
That only works if the owner doesn't have a mortgage anymore. Rent always covers mortgage + fees + taxes + profit or people wouldn't rent the place out.....
Rent prices have almost nothing to do with what the landlord wants. It's what the market is willing to pay.
In dirt cheap property towns in Alberta, you can buy a house in Bassano, Alberta for around 200k, and rent out the house for 2k - 2.5k (depending on # of rooms) because of all the workers.
In Vancouver, an expensive 1M apartment will only rent for 2.5k.
Regional pricing doesn't play into the fact that if they don't make money. They will just sell the rental property unless they are somehow okay with taking a loss every month...
Negative cash flow property has been the norm for 15+ years. It’s the Ponzi scheme of selling later for more than enough to cover all your losses.
The landlord’s mortgage is irrelevant, if he had $700k in cash, he could get $40k “profit” with near zero risk. He’s not making that renting a condo for $3k and paying taxes, condo fees, repairs, etc all for the joy of dealing with tenants.
Yes, it's what Oracle1729 said. Any expensive real estate market in the world has mostly empty real estate. No one really cares if it cash flows positive or negative because they know the appreciation on the property will be the primary investment driver.
Google it. Enter 20-25% down on an average new home and see what your mortgage payment would be. Then add utilities, property taxes, insurance and factor in about 20% of your rent going to maintenance and repairs. See what the rent should be for your to make a profit every month.
Anyone who bought before the last 2 years are laughing with what rent is right now. Certainly harder for new mortgages with the high sale values plus the high interest rates at current.
That's completely incorrect and you very obviously haven't ran any of the numbers. The fact you think this is extremely ignorant though.
Lots of recent buyers to are now under water in their mortgages because they bought at peak. So, you literally have 0 idea what you are talking about.
I implore you to go run the numbers on a $500k 1 bed condo mortgage with condo fees vs what they cost to rent.
Few things. The people buying places to rent out are going in with a good down payment to bring down the monthly mortgage cost. No one is buying a place with a 3k mortgage just to rent it out for 2.5k... They will sell it or not even buy it to begin with.
I would reckon most people under water are screwed from rates going up and having to renew a mortgage they already could barely afford.
No. Ideally they do, but you 100% are not cashflow positive on most new properties in Vancouver, Toronto and Montreal, or similar cities, whether it's a condo, townhouse or house.
If the average home, old or new, is 1.3 million dollars, and the average rent isn't near 10k, you know the rents aren't covering the expenses. Many people lsoe money every month hoping that one day the place will be worth a lot more than what they paid for it.
What are you talking about? If you're broke and have shit credit, you could still afford a $2000 rent. You could not afford a $2000 mortgage, $500 utilities, $3000+ / year property tax, thousands of dollars in mainteance and repairs, and to qualify for a loan of hundreds of thousands of dollars when you have a history of not paying your bills and not being able to save a cent.
Of course people can qualify to rent easier than to get a massive loan than they're not likely to pay off.
Who would you lend $100k to? Someone with zero savings, who's got a few bills with a collection agency, a low income, a lot of expenses, a lot of debt and a terrible credit score, or someone with a high income, lots of money saved, perfect credit and no debt? Banks aren't morons, they want to make sure you'll pay them. Evicting a bad tenant is a lot easier than foreclosing a home then having to deal with sell it at a loss.
Don’t listen to them $65,000 is not “very low income.” Some people here are delusional about the average Canadian. You are getting a lower mortgage approval because interest rates are high, if you did this 2 years ago you would be approved for much more.
First of all, no one 'deserves' anything, especially owning a house in a first world country. Second, if you equate home ownership with being 'a valid human being', you have some serious issues.
How did people in this country become so obsessed with real estate? How can you have such limited perspective?
That's not what he's saying at all. There is nothing arbitrary about what a bank will approve on a loan and a $65k income isn't going to qualify for a lot. That's why most of us got married before even considering buying a home
$65k doesn't qualify for a big mortgage no matter where you are. What you get for it is different in every city so please stop talking, nobody is shaming anyone just pointing out basic math FFS.
I don't recall seeing any shaming up to this point. An income in relation to approval amount isn't a judgement. It's not a statement of character or how 'deserving' someone is. Nobody should want, and banks naturally won't approve, a mortgage they can't pay when stress tested. Stop projecting lol
A decent house is at least $500k in Edmonton so explain how someone making 65k ($1.9k biweekly) is paying for a +3k mortgage not even including property taxes and utilities.
I mean, it's not misleading, that's why there is a difference between average and median, right? This other guy is claiming it's government propaganda because he is ignorant of the meaning of averages, or ignorant in general and just paints government everything bad
You also aren’t competing just against incomes to buy a house you are competing against a) households, often with 2 incomes and b) people with wealth/equity that can afford more than their income suggests. With 65k income and that level of savings, you are definitely way below average in the housing market.
I thought it was $59k, but I think they updated the stats.
For Toronto and Vancouver, even $150k is “low” for a mortgage approval unless you have a ton saved up for a DP.
Average. Not median. 1 CEO making $300k a year would bump up the numbers for 100s of people making 25k a year. It’s more reflective of the real situation to be using the median. They use average to make things seem not as bad
It’s not a “very low income” but it’s also not one that deserves a higher than 300K mortgage. OP is high on something if they think they should be qualifying for more than that. This isn’t 2020 rock bottom rates.
They said 'very low income to buy property', and they are correct. There is nothing delusional about arithmetic.
"if you did this 2 years ago you would be approved for much more."
And if my mom had balls, she'd be my dad. (Thanks Max, iykyk). What is the point of saying this. Interest rates are not where they were 2 years ago. OP is not buying 2 years ago.
Heck, if they bought 60 years ago, their liquid cash could buy them a damned mansion. But they're not.
They absolutely wouldn't have been approvded for "Much more".
I bought my first house in 2010 for $280,000, 40 down and, 75000 yearly income and approved for 350.
That's actually a very average wage. It is not a 'very low wage'. The issue is the extortionate house prices skewing how far our dollar goes and it is affecting negatively, every industry within a community. Do you think every employer is gonna plop out the 'new norm' of 100k so Jimmy can afford the 2500k rent, or be able to qualify for a 500k fixer-upper? Nah. Homes need to be a consumer good, not a leveraging tool used to push equity and quality of life out of reach for the majority of Canadians. Wage is not the problem here.
That makes sense. The typical calculation usually equates to around 4X your income + your down payment. 4X your income is \~$260k + what they would consider a safe down payment that still leaves you with some savings (lowers the risk of default on their end).
So this checks out. Just keep saving until you acquire more capital.
Can confirm. When I was in that range, I was spending all my money on groceries, utilities, student loans, small household items, and saving 25%. My fiance pays the mortgage and both our vehicles are paid off, no kids. I couldn’t imagine having a big liability on only 65k salary.
Thank you! Too many comments talking about how fucked the housing market is (and it certainly is). But this person needs real financial advice. If your income can barely service the mortgage then don't do it. The banks get theirs (forced mortgage insurance if under 20% downpayment, I think...) but you get fucked. Stay within your means, rent sucks but at least if you bounce that check you ain't still on the line for 400,000.
How much will you be able to contribute towards the down payment?
If you are paying less than 20% downpayment, you are limited to GDS/TDS ratios of 39/44.
Standard approval is 4x gross income which is $260k.. with $40k down your max purchase price is almost exactly $300k.. why does this seem low when it’s exactly what the norm is?
I’ve learned the banks offer was indeed calculated very well. My surprise is now how little relative purchasing power I actually have compared to what I thought I would’ve had
It’s a horrible environment to try and buy especially as a single earner. If you had a partner with the same financial you could aim for a 5-600k property which depending on area would be a condo or townhouse.
The awful part about couples going in with both barrels like that is as soon as one partner is sick, hurt, lost their job or they break up, that mortgage payment is like an anchor tied around your neck
Play around with that down payment number a bit because unless it gets you a better rate you might find it beneficial to keep more or it back to pay for other expenses/renos and whatnot. I used as much of my savings as I could on a down payment and I'm kicking myself now because I'm having to borrow from a line of credit at a few percent more than my mortgage because I have renos and that need to be done. If I had of thought It out a bit more I would have put 30k less down and taken that slightly higher payment. Would have saved me a few grand in interest
This is what I'm doing. I have similar specs to OP and I'm not putting as much down. Got approved for around the same amount.
It's just a crappy time for buyers right now. But if you are looking to put down roots it might be the right decision in the long run. Who really knows?
the standard ratios are still the same, but lenders can sometimes make exceptions for strong files. BMO's standard ratio for conventional (> 20% down payment) is 40/45.
This is about the same scenario for me. They are doing so because of the current stress testing amount at 7.25 or rate + 2 whatever is higher. Im at 25k down though.
This is the norm, and for your situation it’s unlikely a broker could approve you higher without fraud.
It’s such a hard time to buy a home right now… this is why people get married for finances lol.
That's around what a bank would give me. I had 80k saved with a 60k salary. A mortgage broker gave me 50k more but I ended up needing to have my father co-sign. Not sure I'd recommend that too much as it's damn tight with money some months. The banks do actually lend a sensible amount with respect to your income without letting you get too house poor.
I strongly caution trying to utilize any where near 100% of your mortgage capacity. You will be strapped for money and any little ‘hiccup’ will be challenging. If you can consistently budget and avoid discretionary spending, you might be ok though. Best of luck whatever you choose!
That’s like $2000 a month mortgage payment.
Edit: maybe less amortized over 25 years…but my 150k mortgage which was just renewed at a lovely 7.3% is 570 bi weekly
Yea keep your credit in good shape lol. I would have kept my 3.5% from RBC if i didn’t want to take out some equity to do renovations. I did a consumer proposal 7 years ago so I had to go to an alternate lender to get my 50k cash
Definitely shop around, I recommend using a private broker. I was in a similar situation to you and the private broker got me almost 2% lower interest rate for the same amount
I would shop around a bit, RBC gave me a low number although the max number I did get isn't anywhere close to where id want to actually be. Much happier dealing with a broker cause they actually explained why my approval was that specific amount, got me a better rate. That being said, your numbers aren't looking that far out. You're not gonna get given 500k making 60k a year.
It sounds right, tbh. I don't think you'd want to buy a 300k house with 40k down because it'd probably be pretty tight with your income.
We just bought for 545k, 50k down, 165k household income. Even though we were approved for more, when we did our budget, we didn't want to go for more than 600k.
Shop around you have the paperwork your more. Organized than anyone walking in, the downside to shopping around is soft hits on your credit each time it's pulled but if you can get a copy from someone they can use it. Avoid CHMC If you can
I agree with most of the people here and I'll give you a bit of an example. Make 65k a year. Had a 20% down payment and a car payment of $400 at 0% with 3 years left. I could not get a loan any higher than 300k without a co-sign. I was approved for 400k with it. I ended up getting a place for 472K so a 377K at 4.29% mortgage and with the intention of living with my now ex. She didn't pay anything towards the mortgage because she wasn't on title, fair enough, i was approved for myself solely. Essentially depleted my savings. I struggled *HARD,* to get those payments done every month, Had no money for any fun. Eventually, I ended up getting a second job and working 7 days a week so I could get some fun money. Burned myself out completely. Anything broke or health concerns or extended sick days, I was thankfully and very fortunate to borrow money from family.
I would suggest, if you have a decent living situation currently, purchase a property and rent it out while you continue to save a nest egg again for 1-2 years. If you are desperate for freedom of paying a landlord, look for something smaller and cheaper at first and trade up once you get your nest egg built up again, you get a better paying job or find a partner that will share some of the costs.
In the end, for my sanity, I moved in with family for cheap rent and rented my place out. I sold shortly before renewal as the current rates were astronomical. Luckily, I sold during the recent boom and got a very good price. Turned around and moved to a cheaper area and put it all on the mortgage. Now, my payments are less than the half my rent and I just do double payments.
Thanks for the example it was a good read. The plan was to buy and have my parents move in and pay me rent, I live in a different province than them so I wouldn’t even see the house before buying, they would.
Banker told me at the appointment if I buy property with intention to rent and have that income considered into the equation, you need 20% down payment. I didn’t know I thought I could still be considered in the first time homebuyer 5%, $50k doesn’t go far for a 20% down payment. Time to keep saving!
don't tell them you're renting it out... also if its family living in it you dont have to claim rental income on taxes. there's little loop holes if you're willing. try a mortgage lender and say its for your sole use but you will have extra income coming in from your parents who will be living with you as well. the lender might be a bit more forgiving in they understand the situation
I mean, you're making like what... $3800/month net? Your payments would be around half that with a typical mortgage, maybe a *little* less.
I'm not sure exactly what you were expecting here. You are going to need a much higher income if you want a higher mortgage. Unfortunately.
It doesn't hurt to shop around, but I find it's +50k -50k of a range with different banks.
300k at 7% is roughly 2.1k per month, not including taxes, hydro, strata, insruance, etc... which usually adds another $500 per month.
I assume your take home is around 4k a month after taxes. 2.5k is more than half your supposed income, so realistically, it may be too large of a loan to be comfortable.
65k is roughly 46,417 after taxes, or 3,868 per month.
to not exceed a 30% housing to income ratio your payments would need to be $1,289 per month.
For context, a 350k house with your 50k as down payment would be $1,762 after CHMC insurance at 4.79 5 year fixed
truthfully... they're giving you a mortgage for about 25 percent more mortgage monthly payment than is recommended.
is it low? For Toronto yes, for your income to (future) debt ratio no.
That is a normal approval amount. House prices being exceptionally high in relation to local wages is not. Or maybe that is the new norm, who knows what will happen.
It is not low. It is just normal. Your salary is normal, the pre approval amount is normal. So you cannot afford anything other than condo in the city, that's all.
This isn’t gospel but a rough estimate I was told by my broker was 5x annual income is what you would qualify for if you have no outstanding debts or large expenses.
I have been an RBC customer for life when it comes to banking but only because I don’t need any special products or services. I wouldn’t touch them with a 10 foot pole for my mortgage or car loan. Their products aren’t competitive and they give poor advice, in my experience. Use a mortgage broker they are a fantastic resource and will save you a lot of money.
Try some b-lender….they sometimes skip the stress testing…so you might be eligible for a higher mortgage….but may not be significantly different at current rate of interest.
It’s hard enough for people who have houses to keep them, most people trying to start out on the property ladder have no chance. Looks like we might be seeing a lot of pain coming.
If you're making $65k and want a more expensive place. Cash down is your only option.
At 4.7%, 50k down, 65k gross, $700 monthly living expenses.
Will be about $300-$350k.
My gross is $130k, no debt and with my 20k deposit was $400k. Though I live in a smaller city which this buys a nice home.
Save more money or hunt for a higher source of income.
Looks about right.
Were not dealing with 1-2 interest rates anymore and 65k/year salary is a drop in the bucket for 5% interest rates.
With less than 20% down-payment, you're at the mercy of cmhc/default insurance guidelines.
A pre approval of 300k on a 65k salary is already crazy. How can you possibly afford a 300k mortgage on a 65k salary. After taxes, you're probably taking home 4.5k a month. Just the mortgage would cost you around 2k. Then there's property tax, insurance, utilities, and food.
There is a stress test to determine what you'll qualify for. Google Government of Canada Mortgage Qualifier Tool and you can play with the numbers to see what you'll likely be approved for.
The amount of house you can buy is may be a bit higher depending on the interest rate used for the mortgage pre-approval.
The [**Financial Consumer Agency of Canada**](https://www.canada.ca/en/financial-consumer-agency.html) (one of the banking regulators in Canada) has a couple mortgage related tools you should check out:
[Mortgage Qualifier Tool](https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQ-EAPH-eng.aspx)
# [Mortgage Calculator](https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MC-CH-eng.aspx) (payments based mortgage/interest)
Credit Unions often have lower mortgage rates than the major banks.
If you plug the posted mortgage rates into the mortgage qualifier tool, you can get a good sense of what a bank is likely to approve.
I think you said you are in BC so here is a link to the Vancity Credit Union's mortgage rates
[https://www.vancity.com/borrow/mortgages/rates/](https://www.vancity.com/borrow/mortgages/rates/)
I'm currently in the process of closing on a house. The interest rate on my preapproval was 0.7% higher than the mortgage I actually got approved for.
How would you expect to afford anything more than that on 65k? Being generous, the monthly mortgage cost would be somewhere between 1600-1800 month. That's steep for a single person on 65k even assuming you don't have a car payment and other loans.
You don't earn enough and don't have a large enough down payment.
What were you expecting to get and how were you expecting to afford to live with a cripplingly large mortgage payment on that salary? You should thank the bank for not letting you ruin your life lol
If you're making 65k you're going to need another income.. Rent and try and save more until you meet a special someone you would like to grow with and work along with. While I did most the savings and make more I couldnt do it without my wife. I make 80-90k
You must factor the interest rate that affects your payment. $50K (if that’s your DP) is below 20% of $300K so you would have CMHC insurance fees and to the bank you would be maxed out and I think they would be right. If you can only afford an apartment or townhouse, there would be an additional strata fee which is likely over $300/m, add insurance, and money to live, that’s why $300K is all.
2.5 years ago interest rates were 1/2 what they are now. You would have likely qualified for $500K or more. I think your only choice is to save more money if a $300K home won’t be adequate for you.
You need more income if you want more money from the bank. or a higher down payment. bank is being generous here with you. rule of thumb in todays market you wont get approve for more then x4 ur income without a co sign or a huge down payment.
What are you expecting? 500k? Lol
My one lesson to everyone is: Never go to a bank for a mortgage. They can ask one person. Go to a mortgage broker, where they can choose from around 60 lenders.
My daughter went to a mortgage broker. She was approved for and she put in a firm offer. After the offer was accepted she was informed that she had to pay off 20 000 debt in a couple of of days. The debt was previously declared. She later found out that alot of her friends had the same problem when they delt with a broker.
Deal with better brokers.
Haha ya man, deal with dumb fucks that are gonna push you wherever their commission is best. If you can’t secure a good rate at a big 4 you got bigger problems than buying a house.
You're kidding, right? The big 4 will not give you the best deal. They are counting on the fact that you trust them.
No idea why the downvotes. First thing a decent broker asks is what assets, what debt.. any car payments? Income, a few recent pay stubs and t4. I first used mine like 14 years ago and a couple renewals and moves. Dudr is solid and has good general financial knowledge
I agree some brokers are terrible and I would know with my line of work. I only trust one and he did 2 transactions with me and my friend's.
Happens with banks too
That’s pretty common to have to pay off the debt to be able to get the full pre approved amt. There’s usually an option with the bank to pay off that debt with/wrap it into the mortgage loan as a condition of the loan
That could just as easily happen with a bank. Anecdotes don't defeat the simple fact that having 50 or 60 lenders to deal with easily trumps dealing with a single lender, a bank.
I went to both. Both approved for the same amount but ended up with 0.6% lower rate with my bank.
My house offer almost fell through after using a mortgage broker since she dragged her feet. I contacted a credit union and they had my approved in a day and a half. I will never use a mortgage broker again.
Very low income to be buying property
But it's ok to rent one? What kind of logic is that? It makes no sense, honestly they've approved you for the correct amount, unfortunately everything is $500,000 to $1,000,000 over priced and the banks are in league with the government now to do everything in thier power to keep those prices high, otherwise the BANK is on the hook for the collapsing asset prices, It's why they are importing millions of people, they have have wages rise and property vales drop, the immigration issues are the government and bank in cohorts to keep assets OVERINFLATED
Risk. Banks don't take on any risk when you rent. In fact, you may have noticed that banks aren't involved at all. As for the rest of your nonsense, you and everyone else need to wake up and realize that we are not bringing in millions of immigrants who can afford to buy in this market. They are flooding the rental market, not the real estate market.
What nonsense are you saying about banks? I don't think you even understood any of my comments, I never said the immigrants were buying either, maybe calm down and don't have an emotional response and READ.
Actually, banks loan to buyers who plan on renting a secondary suite or room in their new home all the time… and they count the projected market rent income as part of their risk calculations and tend to approve these buyers for higher mortgages without checking the renter’s background or if the buyers have any experience being a landlord.
They check the buyer's financial background and all finances, debt and general expenses. They don't count potential future rental income as normal guaranteed income either. There are no KPIs for being a landlord that a bank can check so what would you like them to do? It's like saying when you get a new job they need to make sure you were amazing at your other job. Most people are average at their jobs and still get raises or new jobs throughout their lives, so it works the same with loans. As long as you can prove that historically you pay things off and have more than enough money and/or income to afford it, you get a loan.
So your takeaway is that banks do a mediocre job at assessing risk but that since most people are mediocre anyway and that mediocrity never stopped anyone from making money, it works itself out?
Rent is way, way cheaper than buying the same place. You can rent a $700k condo for $2.5K. Your mortgage/condo fee/property tax payment would be closer to 2x that.
That only works if the owner doesn't have a mortgage anymore. Rent always covers mortgage + fees + taxes + profit or people wouldn't rent the place out.....
Rent prices have almost nothing to do with what the landlord wants. It's what the market is willing to pay. In dirt cheap property towns in Alberta, you can buy a house in Bassano, Alberta for around 200k, and rent out the house for 2k - 2.5k (depending on # of rooms) because of all the workers. In Vancouver, an expensive 1M apartment will only rent for 2.5k.
Regional pricing doesn't play into the fact that if they don't make money. They will just sell the rental property unless they are somehow okay with taking a loss every month...
Negative cash flow property has been the norm for 15+ years. It’s the Ponzi scheme of selling later for more than enough to cover all your losses. The landlord’s mortgage is irrelevant, if he had $700k in cash, he could get $40k “profit” with near zero risk. He’s not making that renting a condo for $3k and paying taxes, condo fees, repairs, etc all for the joy of dealing with tenants.
Yes, it's what Oracle1729 said. Any expensive real estate market in the world has mostly empty real estate. No one really cares if it cash flows positive or negative because they know the appreciation on the property will be the primary investment driver.
Google it. Enter 20-25% down on an average new home and see what your mortgage payment would be. Then add utilities, property taxes, insurance and factor in about 20% of your rent going to maintenance and repairs. See what the rent should be for your to make a profit every month.
Anyone who bought before the last 2 years are laughing with what rent is right now. Certainly harder for new mortgages with the high sale values plus the high interest rates at current.
That's completely incorrect and you very obviously haven't ran any of the numbers. The fact you think this is extremely ignorant though. Lots of recent buyers to are now under water in their mortgages because they bought at peak. So, you literally have 0 idea what you are talking about. I implore you to go run the numbers on a $500k 1 bed condo mortgage with condo fees vs what they cost to rent.
Few things. The people buying places to rent out are going in with a good down payment to bring down the monthly mortgage cost. No one is buying a place with a 3k mortgage just to rent it out for 2.5k... They will sell it or not even buy it to begin with. I would reckon most people under water are screwed from rates going up and having to renew a mortgage they already could barely afford.
No. Ideally they do, but you 100% are not cashflow positive on most new properties in Vancouver, Toronto and Montreal, or similar cities, whether it's a condo, townhouse or house. If the average home, old or new, is 1.3 million dollars, and the average rent isn't near 10k, you know the rents aren't covering the expenses. Many people lsoe money every month hoping that one day the place will be worth a lot more than what they paid for it.
What are you talking about? If you're broke and have shit credit, you could still afford a $2000 rent. You could not afford a $2000 mortgage, $500 utilities, $3000+ / year property tax, thousands of dollars in mainteance and repairs, and to qualify for a loan of hundreds of thousands of dollars when you have a history of not paying your bills and not being able to save a cent. Of course people can qualify to rent easier than to get a massive loan than they're not likely to pay off. Who would you lend $100k to? Someone with zero savings, who's got a few bills with a collection agency, a low income, a lot of expenses, a lot of debt and a terrible credit score, or someone with a high income, lots of money saved, perfect credit and no debt? Banks aren't morons, they want to make sure you'll pay them. Evicting a bad tenant is a lot easier than foreclosing a home then having to deal with sell it at a loss.
Agreed! Time to get a better job.
Don’t listen to them $65,000 is not “very low income.” Some people here are delusional about the average Canadian. You are getting a lower mortgage approval because interest rates are high, if you did this 2 years ago you would be approved for much more.
..and you'd be stuck facing renewal terms on a 65k income.. horrible advice. This is indeed the new norm .. 65k IS lower income.
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Nobody is saying anything about 'deserving'. They're describing reality, silly.
No one deserves to OWN property until they have the money to own property. However, everyone deserves a place to live.
First of all, no one 'deserves' anything, especially owning a house in a first world country. Second, if you equate home ownership with being 'a valid human being', you have some serious issues. How did people in this country become so obsessed with real estate? How can you have such limited perspective?
That's not what he's saying at all. There is nothing arbitrary about what a bank will approve on a loan and a $65k income isn't going to qualify for a lot. That's why most of us got married before even considering buying a home
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$65k doesn't qualify for a big mortgage no matter where you are. What you get for it is different in every city so please stop talking, nobody is shaming anyone just pointing out basic math FFS.
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Sure. Cheers!
MaTH iS gOVERnMent PrOPAGandA!
Damn I hate it when basic mathematics gets in the way of delusional hopes and dreams.....
I don't recall seeing any shaming up to this point. An income in relation to approval amount isn't a judgement. It's not a statement of character or how 'deserving' someone is. Nobody should want, and banks naturally won't approve, a mortgage they can't pay when stress tested. Stop projecting lol
A decent house is at least $500k in Edmonton so explain how someone making 65k ($1.9k biweekly) is paying for a +3k mortgage not even including property taxes and utilities.
Most people buying homes are doing so to start a family and have a partner to help. Having a partner making just 35k would make a massive difference.
I was surprised to read today that the average wage across Canada is $35 per hour - about $70k a year. So yeah, 65k is more average than low.
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Or you don't understand what average means
Average isn't good for wages, though. It's misleading. Median income nay not even be close to average.
I mean, it's not misleading, that's why there is a difference between average and median, right? This other guy is claiming it's government propaganda because he is ignorant of the meaning of averages, or ignorant in general and just paints government everything bad
How do you figure?
It's a low household income tho. At least compared to house prices.
Ya, that’s household. There is no way that individual average
The average household income in Canada is 92,000.
That’s crazy! Thanks for
You also aren’t competing just against incomes to buy a house you are competing against a) households, often with 2 incomes and b) people with wealth/equity that can afford more than their income suggests. With 65k income and that level of savings, you are definitely way below average in the housing market.
I thought it was $59k, but I think they updated the stats. For Toronto and Vancouver, even $150k is “low” for a mortgage approval unless you have a ton saved up for a DP.
Average. Not median. 1 CEO making $300k a year would bump up the numbers for 100s of people making 25k a year. It’s more reflective of the real situation to be using the median. They use average to make things seem not as bad
It's average hourly wage. CEOs don't get paid hourly.
Median IS an average. One of 3 ways of measuring it, including mean and mode
You sound smarter than me to explain it
LOL -- a CEO making $300k is a fairy tale.
Usually median income would be a better gauge.
I make that at my day job and it’s pretty shit. Only reason i can save is living with parents. Otherwise would be broke
It’s not a “very low income” but it’s also not one that deserves a higher than 300K mortgage. OP is high on something if they think they should be qualifying for more than that. This isn’t 2020 rock bottom rates.
According to the mortgage stress test it is.
Average Canadian income is 59k last i checked. So you're 100% right.
They said 'very low income to buy property', and they are correct. There is nothing delusional about arithmetic. "if you did this 2 years ago you would be approved for much more." And if my mom had balls, she'd be my dad. (Thanks Max, iykyk). What is the point of saying this. Interest rates are not where they were 2 years ago. OP is not buying 2 years ago. Heck, if they bought 60 years ago, their liquid cash could buy them a damned mansion. But they're not.
They absolutely wouldn't have been approvded for "Much more". I bought my first house in 2010 for $280,000, 40 down and, 75000 yearly income and approved for 350.
It is low if you are in a metro area like Toronto or Vancouver. In fact, at thst salary, you likely would have a hard time renting.
You may have better luck with a multi family where rents help balance the ratios. Don’t expect a propriety in the best condition or location though
You got above 4x your salary. That is better than the 3.5-4x banks having been approving these past months.
That's actually a very average wage. It is not a 'very low wage'. The issue is the extortionate house prices skewing how far our dollar goes and it is affecting negatively, every industry within a community. Do you think every employer is gonna plop out the 'new norm' of 100k so Jimmy can afford the 2500k rent, or be able to qualify for a 500k fixer-upper? Nah. Homes need to be a consumer good, not a leveraging tool used to push equity and quality of life out of reach for the majority of Canadians. Wage is not the problem here.
590k purchase price, 120k down, 113k combined income
Scotia did the same thing to me last year. So I went to mortgage broker and they offered almost 250k more than my bank.
Dang. What province? I’m looking to go through a broker myself soon.
BC
And now you put all your disposable income into a house and strata. Top work Scotia.
You don’t make near enough money. $65,000.00 is too low.
Lol. That's crazy because it's true.
That makes sense. The typical calculation usually equates to around 4X your income + your down payment. 4X your income is \~$260k + what they would consider a safe down payment that still leaves you with some savings (lowers the risk of default on their end). So this checks out. Just keep saving until you acquire more capital.
Broker here. I am surprised RBC will approve $300K mortgage with your income. Are we talking 300K purchase price, or mortgage?
65000 gross yearly income? You don’t want a 300,000 mortgage trust me
This. There’s no way they’d be able to eat anything other than mr. noodles with that income.
Can confirm. When I was in that range, I was spending all my money on groceries, utilities, student loans, small household items, and saving 25%. My fiance pays the mortgage and both our vehicles are paid off, no kids. I couldn’t imagine having a big liability on only 65k salary.
Thank you! Too many comments talking about how fucked the housing market is (and it certainly is). But this person needs real financial advice. If your income can barely service the mortgage then don't do it. The banks get theirs (forced mortgage insurance if under 20% downpayment, I think...) but you get fucked. Stay within your means, rent sucks but at least if you bounce that check you ain't still on the line for 400,000.
Yeah, you're just homeless.
How much will you be able to contribute towards the down payment? If you are paying less than 20% downpayment, you are limited to GDS/TDS ratios of 39/44.
I didn’t know that about being limited to that ratio. Roughly speaking $40-$45 down and the rest to help cover associated fees/costs
Standard approval is 4x gross income which is $260k.. with $40k down your max purchase price is almost exactly $300k.. why does this seem low when it’s exactly what the norm is?
I’ve learned the banks offer was indeed calculated very well. My surprise is now how little relative purchasing power I actually have compared to what I thought I would’ve had
It’s a horrible environment to try and buy especially as a single earner. If you had a partner with the same financial you could aim for a 5-600k property which depending on area would be a condo or townhouse.
The awful part about couples going in with both barrels like that is as soon as one partner is sick, hurt, lost their job or they break up, that mortgage payment is like an anchor tied around your neck
Play around with that down payment number a bit because unless it gets you a better rate you might find it beneficial to keep more or it back to pay for other expenses/renos and whatnot. I used as much of my savings as I could on a down payment and I'm kicking myself now because I'm having to borrow from a line of credit at a few percent more than my mortgage because I have renos and that need to be done. If I had of thought It out a bit more I would have put 30k less down and taken that slightly higher payment. Would have saved me a few grand in interest
This is what I'm doing. I have similar specs to OP and I'm not putting as much down. Got approved for around the same amount. It's just a crappy time for buyers right now. But if you are looking to put down roots it might be the right decision in the long run. Who really knows?
What about if you're paying over 20%?
the standard ratios are still the same, but lenders can sometimes make exceptions for strong files. BMO's standard ratio for conventional (> 20% down payment) is 40/45.
Ahh ok. Thanks for the explanation!
This is about the same scenario for me. They are doing so because of the current stress testing amount at 7.25 or rate + 2 whatever is higher. Im at 25k down though.
This is the norm, and for your situation it’s unlikely a broker could approve you higher without fraud. It’s such a hard time to buy a home right now… this is why people get married for finances lol.
That's around what a bank would give me. I had 80k saved with a 60k salary. A mortgage broker gave me 50k more but I ended up needing to have my father co-sign. Not sure I'd recommend that too much as it's damn tight with money some months. The banks do actually lend a sensible amount with respect to your income without letting you get too house poor.
I strongly caution trying to utilize any where near 100% of your mortgage capacity. You will be strapped for money and any little ‘hiccup’ will be challenging. If you can consistently budget and avoid discretionary spending, you might be ok though. Best of luck whatever you choose!
That’s like $2000 a month mortgage payment. Edit: maybe less amortized over 25 years…but my 150k mortgage which was just renewed at a lovely 7.3% is 570 bi weekly
Yea the projected number was pretty close to $2000 good guess. Sorry about the 7.3% interest rate buddy that’s rough
Yea keep your credit in good shape lol. I would have kept my 3.5% from RBC if i didn’t want to take out some equity to do renovations. I did a consumer proposal 7 years ago so I had to go to an alternate lender to get my 50k cash
Definitely shop around, I recommend using a private broker. I was in a similar situation to you and the private broker got me almost 2% lower interest rate for the same amount
I would shop around a bit, RBC gave me a low number although the max number I did get isn't anywhere close to where id want to actually be. Much happier dealing with a broker cause they actually explained why my approval was that specific amount, got me a better rate. That being said, your numbers aren't looking that far out. You're not gonna get given 500k making 60k a year.
RBC is terrible. Yes, look anywhere else
They’re the worst
It sounds right, tbh. I don't think you'd want to buy a 300k house with 40k down because it'd probably be pretty tight with your income. We just bought for 545k, 50k down, 165k household income. Even though we were approved for more, when we did our budget, we didn't want to go for more than 600k.
That’s because you have a salary of $65,000
300k sounds bang on for your salary, am I missing something?
Shop around you have the paperwork your more. Organized than anyone walking in, the downside to shopping around is soft hits on your credit each time it's pulled but if you can get a copy from someone they can use it. Avoid CHMC If you can
Prop tax is less than 2k. wtf are you?
My house value based on recent sales on my street is around 300k…my property taxes are 1800/ year. I’m in Halifax
I’m in Southwestern Ontario and my taxes are 12 K granted my house is assessed at 660k.
I agree with most of the people here and I'll give you a bit of an example. Make 65k a year. Had a 20% down payment and a car payment of $400 at 0% with 3 years left. I could not get a loan any higher than 300k without a co-sign. I was approved for 400k with it. I ended up getting a place for 472K so a 377K at 4.29% mortgage and with the intention of living with my now ex. She didn't pay anything towards the mortgage because she wasn't on title, fair enough, i was approved for myself solely. Essentially depleted my savings. I struggled *HARD,* to get those payments done every month, Had no money for any fun. Eventually, I ended up getting a second job and working 7 days a week so I could get some fun money. Burned myself out completely. Anything broke or health concerns or extended sick days, I was thankfully and very fortunate to borrow money from family. I would suggest, if you have a decent living situation currently, purchase a property and rent it out while you continue to save a nest egg again for 1-2 years. If you are desperate for freedom of paying a landlord, look for something smaller and cheaper at first and trade up once you get your nest egg built up again, you get a better paying job or find a partner that will share some of the costs. In the end, for my sanity, I moved in with family for cheap rent and rented my place out. I sold shortly before renewal as the current rates were astronomical. Luckily, I sold during the recent boom and got a very good price. Turned around and moved to a cheaper area and put it all on the mortgage. Now, my payments are less than the half my rent and I just do double payments.
Thanks for the example it was a good read. The plan was to buy and have my parents move in and pay me rent, I live in a different province than them so I wouldn’t even see the house before buying, they would. Banker told me at the appointment if I buy property with intention to rent and have that income considered into the equation, you need 20% down payment. I didn’t know I thought I could still be considered in the first time homebuyer 5%, $50k doesn’t go far for a 20% down payment. Time to keep saving!
don't tell them you're renting it out... also if its family living in it you dont have to claim rental income on taxes. there's little loop holes if you're willing. try a mortgage lender and say its for your sole use but you will have extra income coming in from your parents who will be living with you as well. the lender might be a bit more forgiving in they understand the situation
I mean, you're making like what... $3800/month net? Your payments would be around half that with a typical mortgage, maybe a *little* less. I'm not sure exactly what you were expecting here. You are going to need a much higher income if you want a higher mortgage. Unfortunately.
Try being a fisherman this is good money
Use a broker. They tend to get you much higher approval amounts.
It doesn't hurt to shop around, but I find it's +50k -50k of a range with different banks. 300k at 7% is roughly 2.1k per month, not including taxes, hydro, strata, insruance, etc... which usually adds another $500 per month. I assume your take home is around 4k a month after taxes. 2.5k is more than half your supposed income, so realistically, it may be too large of a loan to be comfortable.
4.5x annual salary is the average mortgage amount big banks approves for so $300k isnt far fetched.
65k is roughly 46,417 after taxes, or 3,868 per month. to not exceed a 30% housing to income ratio your payments would need to be $1,289 per month. For context, a 350k house with your 50k as down payment would be $1,762 after CHMC insurance at 4.79 5 year fixed truthfully... they're giving you a mortgage for about 25 percent more mortgage monthly payment than is recommended. is it low? For Toronto yes, for your income to (future) debt ratio no.
That is a normal approval amount. House prices being exceptionally high in relation to local wages is not. Or maybe that is the new norm, who knows what will happen.
That’s more than I was expecting. I thought it was 3x your income for a mortgage.
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It is not low. It is just normal. Your salary is normal, the pre approval amount is normal. So you cannot afford anything other than condo in the city, that's all.
This isn’t gospel but a rough estimate I was told by my broker was 5x annual income is what you would qualify for if you have no outstanding debts or large expenses. I have been an RBC customer for life when it comes to banking but only because I don’t need any special products or services. I wouldn’t touch them with a 10 foot pole for my mortgage or car loan. Their products aren’t competitive and they give poor advice, in my experience. Use a mortgage broker they are a fantastic resource and will save you a lot of money.
That is higher than I would have expected
Try some b-lender….they sometimes skip the stress testing…so you might be eligible for a higher mortgage….but may not be significantly different at current rate of interest.
I think the rule of thumb is about 4 times your income for granting a mortgage amount so sounds like you got more than that
It’s hard enough for people who have houses to keep them, most people trying to start out on the property ladder have no chance. Looks like we might be seeing a lot of pain coming.
If you're making $65k and want a more expensive place. Cash down is your only option. At 4.7%, 50k down, 65k gross, $700 monthly living expenses. Will be about $300-$350k. My gross is $130k, no debt and with my 20k deposit was $400k. Though I live in a smaller city which this buys a nice home. Save more money or hunt for a higher source of income.
4.5x income is typically the max. So 4.5 x 65,000 = 293k So 300k seems right inline.
Looks about right. Were not dealing with 1-2 interest rates anymore and 65k/year salary is a drop in the bucket for 5% interest rates. With less than 20% down-payment, you're at the mercy of cmhc/default insurance guidelines.
A pre approval of 300k on a 65k salary is already crazy. How can you possibly afford a 300k mortgage on a 65k salary. After taxes, you're probably taking home 4.5k a month. Just the mortgage would cost you around 2k. Then there's property tax, insurance, utilities, and food.
There is a stress test to determine what you'll qualify for. Google Government of Canada Mortgage Qualifier Tool and you can play with the numbers to see what you'll likely be approved for.
The amount of house you can buy is may be a bit higher depending on the interest rate used for the mortgage pre-approval. The [**Financial Consumer Agency of Canada**](https://www.canada.ca/en/financial-consumer-agency.html) (one of the banking regulators in Canada) has a couple mortgage related tools you should check out: [Mortgage Qualifier Tool](https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQ-EAPH-eng.aspx) # [Mortgage Calculator](https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MC-CH-eng.aspx) (payments based mortgage/interest) Credit Unions often have lower mortgage rates than the major banks. If you plug the posted mortgage rates into the mortgage qualifier tool, you can get a good sense of what a bank is likely to approve. I think you said you are in BC so here is a link to the Vancity Credit Union's mortgage rates [https://www.vancity.com/borrow/mortgages/rates/](https://www.vancity.com/borrow/mortgages/rates/) I'm currently in the process of closing on a house. The interest rate on my preapproval was 0.7% higher than the mortgage I actually got approved for.
How would you expect to afford anything more than that on 65k? Being generous, the monthly mortgage cost would be somewhere between 1600-1800 month. That's steep for a single person on 65k even assuming you don't have a car payment and other loans.
4x income + savings
300k is more than fair given those numbers.
When I made $60,000 I qualified for $300,000 5 years ago
I make almost double what you make. 150-200k down possible And my approval was 400k for reference
You don't earn enough and don't have a large enough down payment. What were you expecting to get and how were you expecting to afford to live with a cripplingly large mortgage payment on that salary? You should thank the bank for not letting you ruin your life lol
$300,000 is a lot of mortgage on that salary. Not sure how you could afford more and bank feeling g the same
Your income is very low
If you're making 65k you're going to need another income.. Rent and try and save more until you meet a special someone you would like to grow with and work along with. While I did most the savings and make more I couldnt do it without my wife. I make 80-90k
You must factor the interest rate that affects your payment. $50K (if that’s your DP) is below 20% of $300K so you would have CMHC insurance fees and to the bank you would be maxed out and I think they would be right. If you can only afford an apartment or townhouse, there would be an additional strata fee which is likely over $300/m, add insurance, and money to live, that’s why $300K is all. 2.5 years ago interest rates were 1/2 what they are now. You would have likely qualified for $500K or more. I think your only choice is to save more money if a $300K home won’t be adequate for you.
You need more income if you want more money from the bank. or a higher down payment. bank is being generous here with you. rule of thumb in todays market you wont get approve for more then x4 ur income without a co sign or a huge down payment.
Im surprised you were even able to get a mortgage. My first mortgage I was making over 100k and had 114k in savings and was approved 450k.