How much you need to earn to afford a home in Toronto and the GTA + MORE Oct 8th

You’ve never missed the rent or been hounded by collection agents, so surely you’ve got stellar credit, right? Not necessarily.

There’s more to a good credit rating than simply paying the bills on time, explains debt counsellor Brian Betz of Money Mentors, a non-profit credit agency in Calgary. While payment history counts for 35% of your score, which is calculated within a range of 300 to 900, the other determining factors break down as follows (and you’ll find more detail below):

30% credit utilization
15% length of credit history
10% the number of credit inquiries on your report
10% the types and variety of credit you have

A score of 800 or more is excellent, 720 to 799 very good, 650 to 719 good, and 600 to 649 fair. If your credit rating is between 300 and 599, lenders will consider you a poor bet.

Being on top of the lesser known elements of credit can help you avoid nasty surprises, like being declined for a car loan or mortgage, or not qualifying for the best rates because of so-so credit…

Looking at the Toronto housing market through a lens of percentages, shifting sales numbers and interest rates may be the go-to method for industry insiders, but for many run-of-the-mill buyers, there’s really one thing that matters: “What kind of home can I afford?”

To help answer that question, let’s look at the level of income you or your household are going to need to purchase a home in Toronto and the Greater Toronto Area (GTA), based on the benchmark home prices reported by the Toronto Regional Real Estate Board (TRREB) in August 2022. 

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Income needed by property type

First, let’s look at the income required for home buyers across the entire GTA (both the 416 and suburban 905) by property type. 

Across the GTABenchmark home priceHousehold income neededMonthly mortgage paymentSingle-family detached$1,414,000$280,000$6,741Single-family attached$1,079,000$214,000$5,144Townhouse$838,300$167,000$3,996Apartment/condo$739,000$148,000$3,523

There’s no debating that you will require a significant household income to afford any home in the GTA…

Prospective house hunters and those looking to refinance an existing mortgage should consider the impact of their lines of credit on their mortgage application. That’s because lenders take non-mortgage debt, including line of credit payments, into account when determining how much you can afford to borrow. 

You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*I’m buying a homeI’m renewing/refinancingYou will be leaving MoneySense. Just close the tab to return.

How a line of credit affects a mortgage application

Lenders consider factors like a borrower’s creditworthiness, income and existing debt before lending them money.

When it comes to mortgages, they want to know what percentage of your income will be spent on housing costs, to ensure you can afford your future mortgage payments. This is called the gross debt service ratio (GDS), and it is based on your mortgage principal and interest, taxes, heating costs and condo fees (if applicable) divided by your income…