How Much House Can I Afford With $60,000 Salary in Canada

Is $60K a good salary in Canada?

You may be wondering if $60K is considered a good salary in Canada. The average income in Canada is $53,100 which means that someone making $60,000 would make 12.99% more than the average income in Canada. This salary is well above average which would make it a good salary.

While $60K is a good salary in Canada, those competing for a home in the housing market may still feel like this income is not enough. The average household income in Canada is $112,674 which gives households more room to compete for houses in the market.

How much house can you afford?

Exploring the affordability of a home on a $60,000 annual salary in Canada involves several key factors. While your income plays a crucial role, other considerations — such as your down payment size, existing debt obligations, and credit rating — also influence your overall home affordability.

The 32/39 rule for determining home affordability

The 32/39 rule is a guideline used to assess home affordability based on a household’s ability to manage debt. Financial institutions commonly apply this ratio when evaluating mortgage applications for homebuyers. Here’s how it works:

32: The front-end of the ratio or the "32" focuses on housing expenses which include mortgage payments, property taxes, and insurance. These costs should not exceed 32% of your gross monthly income.

39: The back-end of the ratio or the "39" focuses on all debt obligations such as credit card payments and car loans in addition to your monthly housing costs. These costs should not exceed 39% of your gross monthly income.

Let's breakdown how the 32/39 home affordability rule can be applied to a $60,000 salary in Canada.

Monthly Salary

$60,000 annual salary

/ 12 months

= $5,000 per month
32% - Home costs should not exceed this amount

$5,000 per month

x 32.00% gross debt service ratio

= $1,600 per month
39% - Total debt should not exceed this amount

$5,000 per month

x 39.00% total debt service ratio

= $1,950 per month

For a salary of $60,000 in Canada the 32/39 rule provides guidance that total home costs should not exceed $1,600 per month and total debt costs should not exceed $1,950 per month. Sticking to these affordability limits will also increase chances of mortgage approval.

It's also crucial to consider the federal stress test when considering affordability. This stress test evaluates your ability to handle mortgage payments as interest rates increase.

How much mortgage can you afford with an $60,000 salary in Canada?

The 32/39 Rule is essential when determining how much mortgage you can qualify for. With a $60,000 salary, we want our total home expenses to stay below the calculated amount of $1,600. To achieve this, our monthly mortgage payment should be less than $1,600, leaving room for other home-related costs.

Additional Resource: Mortgage Affordability Calculator to try out other variables which will impact home affordability.

How much house can you afford?

In Canada, with a $60,000 salary, you would be able to afford a monthly mortgage payment of less than $1,600. This mortgage payment in combindation with the down payment would provide you with the total cost of a home you would be able to afford.

How much mortgage can you afford with other salary amounts

See how much house and mortgage you can afford with various salaries in Canada: