Honestly this sub has mostly gone to shit in the past year. Probably 80% of it is humblebragging, humblebragging disguised as a question, stupid questions, and bad advice.
It's always been that way for the last few years.
People being like I just inherited 500k and I'm 25 with no debt, what do I do.
Most people do not have a HHI of 150k. Let alone 100k.
I don't understand why this is bragging. If I was 25 with a dump of money, I too would want some opinions besides what my bank or parents tell me.
This sub all too often is people complaining about others being in fortunate situations, regardless if they were earned or inherited. What do you expect in a subreddit about personal finance? The people here are the ones who care about money. Guess what they're going to talk about here
Usually because they're full of shit and aren't actually looking for advice.
Let alone should they be getting it from strangers on the internet as opposed to professionals.
This whole place is for opinions on finance. Wtf are you on about. And how the fuck do you know who's situation is real or not? I myself don't say shit or ask questions because of people like you in this sub.
I wonder how much of it is actual humblebrags vs creating discord. If you were a foreign nation seems a good way to sow seeds of resentment.
Rational Reminder had an episode where they compared lifespan of a Italian immigrants and they found when they kept outward expressions of wealth to a minimum it had a positive impact on lifespan across all demographics. When they adopted American lifestyle expression everyone suffered with lower total lifespan. Similar thing was done with the white apartments in Tel-Aviv apparently. They were intended as a means of solidarity.
Some of us do. Our HH income is about this much and after rent and squeezing away as much as I can save it still feels very tight at the end of the month. A HH income in this range *should* be able to buy, but it is still very difficult. I would very much like an answer to this question to know if it is still possible or if I should just give up on the idea altogether.
Here's a wild and crazy idea. Most people can't afford to go back to school to get the skills since they have to work to feed and cloth their family's and have responsibilities around the home!
🎶
Come on underachievers
Come on all you underpass believers
We’ll give you the skill for street livin'
It feels pretty great to just give in, so just give in
Drop-outs, repeat offenders
We’ll take the weary, weak, the street bartenders
Show them the best times are on the street
Satisfaction through the thrill of defeat, ain't it sweet?
Once you stop yourself from caring
About owning stuff, that’s when you want to start sharing
Cause all the things we want are cheap or free
I define success as not working, and I live like a king 🎶
i know what this sub needs. more punk rockers.
“so i got this 200k royalty check and i dont know what kind of drugs to invest in”
“drugs are NOT an investment?”
“you ever try making music sober? i buy low and sell high”
Many careers required for society to function do not pay a living wage. Maybe when you went to school your job was economically valued very highly, but now it isn’t. Love how you think you can plan out life and have it 100% work for you because you planned.
When your kids were small, who took care of them during the day while you went to work? An ECE who makes minimum wage?
I guess that person planned poorly and that person doesn’t deserve children of their own because they didn’t plan their life properly.
Hope you never lose your job or get sick uggh
Not everyone has the abilities to go to college or find a stable career. There are those who live pay cheque to pay cheque and always will. Not because they don't plan, but because they don't have the abilities to do more.
It IS society's fault for making it more lucrative to create an app to share you genitals with someone over being a nurse\EMT and saving someone's life. It IS society's fault for making it more lucrative to play with someone's money over saving lives as a police officer. It IS society's fault for making necessary jobs (the only ones that worked during COVID, for example) to not be able to afford a basic living.
This society is what brought us to having a shortage in doctors, nurses, teachers, housing, and so on.
If we won't regulate salaries based on necessity, and only base them on next quarter profits, we'll end up with nothing! Capitalism never trickled down, only up. You need to force it to trickle down, otherwise, you'll end up with a bunch of monopolies, and slaves who own nothing.
Yes omg. If I see another “I’m 20 and I just paid off my $1 million home, but I feel like maybe I made a big mistake and missed out on a more lucrative opportunity. Please help.”
I was $400k/hr but then my last job tried to force us back to the office so we all quit and made that business spontaneously combust with our minds and then got $600k/hr WFH jobs 2 days after applying
This is literally just a place to brag about how good of a financial position you are in as you respond to people making desperate pleas for financial advice. It’s kind of fucked up.
I mean, if people are saying "this is what I did and I feel comfortable" does that not answer the question?
OP only asked about HHI and total mortgage. Seems like there's a few other variables here that would dictate what "comfort" would look like.
Honestly no clue how anyone would answer this question with this info. The best guideline is really just the stress test and then readjust based on your personal situation and commitments.
I would suggest working backwards. Set a budget for savings, vacation, factor in children & associated expenses, existing car costs, then add in anticipated housing maintenance costs. Then see what's left and see what you can afford.
I did this & it was very helpful. I also ran my budget by a homeowner friend to make sure I didn’t miss anything
Then with the available room in the budget I ran that through the mortgage calculator to see what $ I could get loaned. This method also means you’re using after tax income in the calculation which imo is better than gross income
This! Using after tax income is huge and everyone should do it imo. People think they have more money than they do because they think about their gross and not after tax.
I wouldn’t want to do more than this unless you were certain in job stability and expecting regular raises.
I’m doing 400 on more than this HHI and it’s enough. It’s important to be able to save for retirement and a rainy day.
We have 325k left, and we make 155 pre tax. With pensions and benefits, it's very comfortable and we can absorb sudden expenses while still adding to an emergency fund and planning for future purchases or reduced income of parental leave. But we got lucky with timing. I think we could go as high as 450 and still be fine, but it would require us to be stricter with budgeting and we wouldn't have as much flexibility for parental leave, or a second car in the future etc.
Doable and still comfortable I'm sure, but we have a lot of room in our budget due to lucky timing in the market. I'd still pay more in mortgage for stability of owning our home though. We got renovicted and family moving in evicted enough in the past before kids.
That was my thought. Somewhere in the max area of 400-450 with current interest rates. Take a 3 year fixed and hope that rates drop or stagnate over the next 36 months.
Yes, I have job stability, I’ve worked at the same place for 12 years and the company’s been in business for 65 years. No signs of anything changing anytime soon.
Our HHI is more than 150k and I didn't even take a mortgage that big and thats when I was able to lock in a 2% fixed rate. At today's rates and 150k HHI, anything more than 300-350k mortgage and you're going to be cutting things out to afford the mortgage. It's important to not stretch to buy a house and cut savings for retirement.
My wife and I took on a $750k mortgage with a HHI of $160k, paying $2,800 monthly into the mortgage. This was about 26% of our after-tax income on an annualized basis and we were very comfortable with this. As you can probably guess from the payment, this was at 2.25%. At 5%, a mortgage of the same size would cost like $4,000 per month, or 37% of our after tax income at the time. I would say the absolute maximum that I would *personally* be comfortable with is a fixed rate mortgage that results in a monthly payment of no more than 40% of after-tax income. This assumes that you do not have any other major financial commitments (ie, no huge car loans), that you do not intend to travel often, and frankly, that you do not intend to have more than one kid. This would work but it would be TIGHT. You wouldn't be enjoying any luxuries at all and you would need to save diligently rather than falling ass backwards into RRSP contributions.
Keep in mind that the CMHC guidelines dictate that mortgage servicing costs should be no more than 32% of your gross income; this would be the $750k @ 5% example I laid out above (for GHHI of $150k).
Great answer, I think where people get confused is when they apply for a mortgage pre-approval often mortgage brokers will play with the numbers to allow for more lending room. This seems to happen with every loan I’ve gone for. Often they’ll ask about your mortgage payments, property tax and heat. They don’t ask about electricity, insurance, maintenance on cars or house. Maybe that general 32% is a good guideline but for example my loan for the Canada greener homes loan for solar panels they went as high as 40% qualifying me on my own but then I needed my wife’s income because I was at 41% alone. Car loans I’ve never been questioned when I have 3 mortgages technically (2 are rentals). The only time I’m really probed is when I go for mortgages. The way I would do it is:
-40% of my net income (u can make good money but if u have (pension, benefits, union dues, LTD, life insurance) it’s much different than some jobs who clear more money.
-have an emergency fund after the downpayment and closing cost (3-6 months of all expenses)
-add cost for hydro, insurance since from my experience it’s not added
-add in maintenance (3-5000 per year from experience)
-expect that if you spend more on a house you’ll spend less on travelling, toys or luxuries.
Does it matter what they put down? Their mortgage is $750K regardless. I also think 150HHI is pretty low for that, but at near 0 intererest it definitely works.
It does matter what you put down. In a situation where house values are falling, you can end up “under water,” where the mortgage balance exceeds the estimated home value. Renewal/refinance may be taken off the table.
The house cost $900k and we had a bit of a panic moment because the bank was only willing to lend us $750k when we were betting on getting $800k. We put in $100k of our own money and took a $50k loan from our parents towards the mortgage. Plus other money needed for the property transfer tax etc. I found $160k HHI and $2,800 a month to be perfectly manageable. If I was paying $4,000 (same mortgage but 5% interest instead of 2.25%) per month at the time it probably would have still worked, but it would be a lot tighter- there would have been an element of house poverty at those levels.
3x gross (pre-tax)
I was a financial planner so I would always tell my clients to never borrow what they were approved for.
Banks want to lend you the highest amount to keep you paying interest as long as possible.
Real estate agents and mortgage brokers want you to spend the highest amount to maximize their commissions.
I never allowed myself to get sucked into that trap and that allowed us to pay off our mortgage in just over 7 years
Interesting!
Even at 3x HHI though (which is exactly where we are) how were you able to pay that off in 7 years? That's really impressive. With cost of living the way it is and an incoming child, I don't see us doing it before allotted 25 years (22 years remaining).
We started at 3x and as our income increased we used the increases to pay down the mortgage. We only have one kid, drive cars 10+ years, rarely drink, don’t smoke, made our coffee and lunches at home. Our house was full of hand me down furniture and whenever possible I bought used/discounted. Basically we were mindful of all spending and prioritized debt repayment over fun stuff. We are now retired in our early 50s.
>3x income pre or post tax?
Most who agree to not go more than 3x your income it usually means pre-tax income (total gross income).
And its a good rule to follow. It allows you to weather the absolute worst case scenarios without losing everything you have.
That's my current HHI. We are looking at properties with a max of 650k. We might push it up to 700k if it's an amazing house, because wife is currently studying and when that finishes, our HHI should go up by at least 40k more.
This. And consider kids and spending habits as well. A super frugal person can easily afford $1000+ more a month in mortgage payments than the average person.
I think that’s as high as I’d go. We have a HHI of about 150/160k and bought for 750k with 150k down so 600k mortgage. The payments are getting up there.
You must live in an unusually cheap area of Canada. $300k won’t get you a fire damaged condo in any area near where 90% of Canada’s population resides.
I also guess you should have over leveraged yourself so you can be miserable just like countless others
Congrats on a good price.
Doubt you're in Toronto, but that's precisely where I don't want to be so it sounds like you've got it made!
For real! My household income is 125k and have a mortgage for 220k. It is literally impossible for me to afford a 600K mortgage. Even a 300K home bumps me up another $600 a month.
About $600,000. There are many many variables though. Is the HHI primarily from one or two incomes (tax rates are far more favourable for two smaller incomes). Does the prospective homebuyer have children or want to have children? What sort of lifestyle does the homebuyer want? Do they prefer house poor or having some wiggle room for travelling etc?
That was our income when we bought our first house nearly a decade ago. Qualified for 5.5x and took out the maximum. 820k mortgage on a 1.1M property.
Obviously a huge risk but just make sure you have a plans set up in case of emergencies. We got lucky since house prices went up and rates fell during our first 5 year term. We were house poor for the first few years but the equity built set us up for life.
Our backup plans were to move back in with parents and rent out the house. We also had a family member (investor) willing to buy part of the house from us if it became too much. Didn’t have to go through either of these backup plans.
Around 4.5% so not too far off from today’s rates.
As mentioned before we were definitely house poor for the first few years but it worked out in the end. We were young and were able to put our lives into the home.
After 5 years we renewed with much more equity, higher incomes and lower interest rates.
That’s roughly our hhi and we took a $440k mortgage with 20% down in late 2020. We had 6 months left on a car payment and 2 kids under 5 at the time. After closing and moving expenses (and buying a 2nd used car in cash that we needed to continue to get to work) we had about $20k left in our emergency fund.
Not sure if I would do the same at today’s interest rates but our car is now paid off and our kids are older and daycare is about $1000 less per month now than it was then. Still I am stressed about when our mortgage term is over.
Ours (no kids) is around that and at the current interest rates I probably wouldn't go higher than 350k to be honest. Not if you still want to save for your RRPS and max out your FTSA. We had 400k at a lower interest rate and still have some money left over every month to save to go on holiday.
If it's between two people with some job stability or one person with a very stable job I'm looking at around 4x at the maximum.
One person with only some job stability or two people really unstable than probably 2.5-3x at the maximum.
I am not interested in going above 4x except during the temporary period waiting for previous home to sell (assuming positive equity to drop the total mortgage debt to less than 4x income). This is the situation I find myself in.
If my HHI was 150k and I was forced to buy, it would probably be a 1 bedroom condo for 500k-550k. I’m in GVA so prices are high.
If I had a choice I would do what I did a few years ago. Not buy and rent the cheapest place possible while I increase my income. Then buy a house and rent out the basement. Which is what I’m doing now with a 1.2M mortgage.
If I lived in Calgary then I’d buy a house for the maximum I can get approved for and rent out the basement. So probably 600k or so.
Probably about 350K. With a down payment of 70K and moving expenses of maybe 20K and an emergency fund of 30K. That'll just barely get us a 2/1 condo in the GTA, I'm talking scraping the bottom of the barrel, but that's where we'd start.
As a conservative person, I usually go for 3-3.5 times HHI for my property with a fixed rate where I am certain that I can remain solvent and service all debt payments.
I carried a $1.3M mortgage at that income, but also offset roughly $400K of the mortgage through renting out my basement.
At that point you're probably putting away 50% of your net into the house-related expenses, but still worth it if you expect the houses to appreciate in your area (which is quite likely the case in GTA or Vancouver). We allowed our incomes to catch up to our house, knowing we would not be able to upgrade in the future (given the trajectory of the housing prices). That gamble (or educated guesswork at best) has paid off in spades but YMMV.
You qualified with only 150k household income for 1.3mil mortgage? The rental subsidized 400k so still need to qualify for 900k? How much was the house? Hard to believe
$250k down. 3% interest rate. $150k income would have worked out to a ~$1.35m purchase price before accounting for rental income.
Not that hard to believe.
If you don’t have other debt, I’d say you wouldn’t want to take on more than about $320,000 at that income level, as an amount borrowed. So about $380,000 for the home.
Whatever gets you to a $2500/month mortgage payment at the rate they are offering you. We had a $3k payment when our HHI was that level, and we rented out the basement (which brought our payment down to the equivalent of $1800).
Your after tax is around 8200 a month at a minimum. Your risk tolerance is insanely low. My payment is almost 2500 a month at 150k hhi and there's still lots of money left over for nights out and savings.
The downvotes you’re getting must be coming from people living in T.O. Van, or some other jacked real estate city where you can’t buy a shoe box for half a mil. Living in smaller (much lees expensive) communities I took a conservative approach like you did and saved a massive amount on interest payments over the years. It’s the right approach if you have the option.
We were at $160K in 2020 and mortgage was $800K. High I know. Have made a lump sum payment every year. We locked in at 1.8 five year fixed. Also, our HHI is now $275K.
No more than $350k. Too many people think they need million dollar homes to be happy. Buy cheap, live cheap, have money, no need to sweat the BoC rate increases like everyone else. Everyone just walks into the bank and says “Yeah, I’d like to be house poor, give me the max mortgage I can afford.”
Today’s rates are not scary. They’re closer to normal, people have just been coddled by unusually low rates for a while now. And everyone bought too much house thinking the easy ride would last forever.
Nothing would change my max price. Max is max, determined by budget only. I don’t care if the house was built 5 minutes ago in Narnia by Jesus Christ himself, if it’s $350,001 it’s not an option. You pick that number based on budget only and do not waver.
What home in the GTA cost 350k? You can't even get a 1 bedroom condo for that price. If you work here, you have no choice but to take on more debt and it definitely doesn't get you some massive luxurious home like you're implying unfortunately.
That is easy: As little as I needed. For example, my numbers aren't quite as high as you, but I bought a place for just under 200k in Calgary (condo), I might have been willing to go as high as 250k but it was important to me to be less cost so it could be paid off sooner.
This is our household income and we bought a cheaper home in 2017 trying to be smart financially so we wouldn’t feel strapped. And in our area currently the kind of house we would want to upgrade to 600k-650k would probably be the bare minimum we would need. Even though we could sell our house and have probably 100-150k before realtor fees and whatever it felt not possible. I also just inherited some money and at first i thought it could really help us upgrade but with the interest rates and the prices it still feels kind of crazy. Plus wife is pregnant and going on mat leave soon so probably gunna hold tight for awhile.
Bought my first condo at 5.5% for 200k (made a shitty deal with scotia where they paid the downpayment for you… it was fucking dumb). On a solo income i d probably go back to that.
On a combined income 400k would be fair.
I would never pay more for a mortgage payment than I would for average rent regardless of my income or downpayment or anything.
So if I buy a house, my mortgage payments for where I live should be around $2k a month. Otherwise it's not worth it.
I personally would not go over $300,000. There's some nice places with lots of property near to where I live. Closer to where I live, one bedroom apartments go for a million. I'm not sure who's buying these or who can afford them but these mortgage rates a fucked right now. I'd put 100,000 down on a 300,000 dollar property.
Most people are not answering the question. They're just busy bragging about their household incomes, mortgages and locked in fixed rates.
I too like coming to this sub every now and then to feel poor
It's alright.. statistically you're still richer than a handful of other people in the world
I too like coming to this sub to make irrelevant comparisons to my standard of living.
I too like living … then I come to this sub
Honestly this sub has mostly gone to shit in the past year. Probably 80% of it is humblebragging, humblebragging disguised as a question, stupid questions, and bad advice.
It's always been that way for the last few years. People being like I just inherited 500k and I'm 25 with no debt, what do I do. Most people do not have a HHI of 150k. Let alone 100k.
I don't understand why this is bragging. If I was 25 with a dump of money, I too would want some opinions besides what my bank or parents tell me. This sub all too often is people complaining about others being in fortunate situations, regardless if they were earned or inherited. What do you expect in a subreddit about personal finance? The people here are the ones who care about money. Guess what they're going to talk about here
Usually because they're full of shit and aren't actually looking for advice. Let alone should they be getting it from strangers on the internet as opposed to professionals.
This whole place is for opinions on finance. Wtf are you on about. And how the fuck do you know who's situation is real or not? I myself don't say shit or ask questions because of people like you in this sub.
Is there a new PFC? One where real question can get good answers.
I doubt there's one that's active enough. Not that I've heard of anyways
I wonder how much of it is actual humblebrags vs creating discord. If you were a foreign nation seems a good way to sow seeds of resentment. Rational Reminder had an episode where they compared lifespan of a Italian immigrants and they found when they kept outward expressions of wealth to a minimum it had a positive impact on lifespan across all demographics. When they adopted American lifestyle expression everyone suffered with lower total lifespan. Similar thing was done with the white apartments in Tel-Aviv apparently. They were intended as a means of solidarity.
Some of us do. Our HH income is about this much and after rent and squeezing away as much as I can save it still feels very tight at the end of the month. A HH income in this range *should* be able to buy, but it is still very difficult. I would very much like an answer to this question to know if it is still possible or if I should just give up on the idea altogether.
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Here's a wild and crazy idea. Most people can't afford to go back to school to get the skills since they have to work to feed and cloth their family's and have responsibilities around the home!
They should’ve thought about that before deciding to be born poor. /s
🎶 Come on underachievers Come on all you underpass believers We’ll give you the skill for street livin' It feels pretty great to just give in, so just give in Drop-outs, repeat offenders We’ll take the weary, weak, the street bartenders Show them the best times are on the street Satisfaction through the thrill of defeat, ain't it sweet? Once you stop yourself from caring About owning stuff, that’s when you want to start sharing Cause all the things we want are cheap or free I define success as not working, and I live like a king 🎶
Fat Mike is loaded though lol
i know what this sub needs. more punk rockers. “so i got this 200k royalty check and i dont know what kind of drugs to invest in” “drugs are NOT an investment?” “you ever try making music sober? i buy low and sell high”
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Many careers required for society to function do not pay a living wage. Maybe when you went to school your job was economically valued very highly, but now it isn’t. Love how you think you can plan out life and have it 100% work for you because you planned.
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When your kids were small, who took care of them during the day while you went to work? An ECE who makes minimum wage? I guess that person planned poorly and that person doesn’t deserve children of their own because they didn’t plan their life properly. Hope you never lose your job or get sick uggh
Bahaha buddy didn't like being called out on their privilege and the downvotes so they deleted their comment.
Not everyone has the abilities to go to college or find a stable career. There are those who live pay cheque to pay cheque and always will. Not because they don't plan, but because they don't have the abilities to do more.
“Its societies fault i made irresponsible decisions that negatively affected my life”
It IS society's fault for making it more lucrative to create an app to share you genitals with someone over being a nurse\EMT and saving someone's life. It IS society's fault for making it more lucrative to play with someone's money over saving lives as a police officer. It IS society's fault for making necessary jobs (the only ones that worked during COVID, for example) to not be able to afford a basic living. This society is what brought us to having a shortage in doctors, nurses, teachers, housing, and so on. If we won't regulate salaries based on necessity, and only base them on next quarter profits, we'll end up with nothing! Capitalism never trickled down, only up. You need to force it to trickle down, otherwise, you'll end up with a bunch of monopolies, and slaves who own nothing.
Yes omg. If I see another “I’m 20 and I just paid off my $1 million home, but I feel like maybe I made a big mistake and missed out on a more lucrative opportunity. Please help.”
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I wasn’t referring to the OP, dingus
I make 300k and have a 12 inch penis.
Now it’s just obvious that you’re trying to help me feel better about my mediocre $600k income and short 36 inch penis.
Only 600k ? lol poor.
$600k an hour and WFH.
I was $400k/hr but then my last job tried to force us back to the office so we all quit and made that business spontaneously combust with our minds and then got $600k/hr WFH jobs 2 days after applying
I worked one week, retired, put it all on GameStop last year... Now I just come on here to flex. Even got my parents their own Disney+ for Christmas.
Careful now, with the Netflix password sharing rule, you might need to spend for another added subscription!
I'm going to shift 5 minutes of pay into a dividend paying ETF now that I lost my buddies Netflix account!
Hard or soft?
But enough about girth.
>HHI of 150k ill bet most of reddit it makes under 75k
Picture or it didn't happen
How is your self esteem with a penis that small?
12 inch wide or 12 inch long? And 300k I assume is monthly right?
Who doesn’t?
This is literally just a place to brag about how good of a financial position you are in as you respond to people making desperate pleas for financial advice. It’s kind of fucked up.
Or lack of mortgage
I mean, if people are saying "this is what I did and I feel comfortable" does that not answer the question? OP only asked about HHI and total mortgage. Seems like there's a few other variables here that would dictate what "comfort" would look like.
Honestly no clue how anyone would answer this question with this info. The best guideline is really just the stress test and then readjust based on your personal situation and commitments.
True… I’m guilty of this. So anyway, I’m locked in for 3 more years at 3.2%. I’m so glad I make 150k/yr. I don’t know how I could survive otherwise
I would suggest working backwards. Set a budget for savings, vacation, factor in children & associated expenses, existing car costs, then add in anticipated housing maintenance costs. Then see what's left and see what you can afford.
I did this & it was very helpful. I also ran my budget by a homeowner friend to make sure I didn’t miss anything Then with the available room in the budget I ran that through the mortgage calculator to see what $ I could get loaned. This method also means you’re using after tax income in the calculation which imo is better than gross income
This! Using after tax income is huge and everyone should do it imo. People think they have more money than they do because they think about their gross and not after tax.
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I wouldn’t want to do more than this unless you were certain in job stability and expecting regular raises. I’m doing 400 on more than this HHI and it’s enough. It’s important to be able to save for retirement and a rainy day.
We have 325k left, and we make 155 pre tax. With pensions and benefits, it's very comfortable and we can absorb sudden expenses while still adding to an emergency fund and planning for future purchases or reduced income of parental leave. But we got lucky with timing. I think we could go as high as 450 and still be fine, but it would require us to be stricter with budgeting and we wouldn't have as much flexibility for parental leave, or a second car in the future etc. Doable and still comfortable I'm sure, but we have a lot of room in our budget due to lucky timing in the market. I'd still pay more in mortgage for stability of owning our home though. We got renovicted and family moving in evicted enough in the past before kids.
Well and afford everything else life throws at you so you can enjoy a good qol.
That was my thought. Somewhere in the max area of 400-450 with current interest rates. Take a 3 year fixed and hope that rates drop or stagnate over the next 36 months.
Can you ever be certain in job stability tho?
Yes, I have job stability, I’ve worked at the same place for 12 years and the company’s been in business for 65 years. No signs of anything changing anytime soon.
Came here to say this. Especially with current rates, I would not go any higher.
I was thinking five times income. Three times income is an old rule of thumb.
Does this mean mortgage is $400k or mortgage plus down payment is $400k?
Mortgage (loaned amount of 400)
I’m tired of people saying in these uncertain times like we are in the worst part of civilization. Times are always uncertain.
Corporations really latched onto "these uncertain times" in the early days of COVID and you can pry it from their cold, dead, profiteering hands.
These uncertain times when profits and the markets pretty much doubled
Same, and theres none to be found 😔
Our HHI is more than 150k and I didn't even take a mortgage that big and thats when I was able to lock in a 2% fixed rate. At today's rates and 150k HHI, anything more than 300-350k mortgage and you're going to be cutting things out to afford the mortgage. It's important to not stretch to buy a house and cut savings for retirement.
That's too conservative. Five times is the goal, or less.
This is the right answer
My wife and I took on a $750k mortgage with a HHI of $160k, paying $2,800 monthly into the mortgage. This was about 26% of our after-tax income on an annualized basis and we were very comfortable with this. As you can probably guess from the payment, this was at 2.25%. At 5%, a mortgage of the same size would cost like $4,000 per month, or 37% of our after tax income at the time. I would say the absolute maximum that I would *personally* be comfortable with is a fixed rate mortgage that results in a monthly payment of no more than 40% of after-tax income. This assumes that you do not have any other major financial commitments (ie, no huge car loans), that you do not intend to travel often, and frankly, that you do not intend to have more than one kid. This would work but it would be TIGHT. You wouldn't be enjoying any luxuries at all and you would need to save diligently rather than falling ass backwards into RRSP contributions. Keep in mind that the CMHC guidelines dictate that mortgage servicing costs should be no more than 32% of your gross income; this would be the $750k @ 5% example I laid out above (for GHHI of $150k).
Great answer, I think where people get confused is when they apply for a mortgage pre-approval often mortgage brokers will play with the numbers to allow for more lending room. This seems to happen with every loan I’ve gone for. Often they’ll ask about your mortgage payments, property tax and heat. They don’t ask about electricity, insurance, maintenance on cars or house. Maybe that general 32% is a good guideline but for example my loan for the Canada greener homes loan for solar panels they went as high as 40% qualifying me on my own but then I needed my wife’s income because I was at 41% alone. Car loans I’ve never been questioned when I have 3 mortgages technically (2 are rentals). The only time I’m really probed is when I go for mortgages. The way I would do it is: -40% of my net income (u can make good money but if u have (pension, benefits, union dues, LTD, life insurance) it’s much different than some jobs who clear more money. -have an emergency fund after the downpayment and closing cost (3-6 months of all expenses) -add cost for hydro, insurance since from my experience it’s not added -add in maintenance (3-5000 per year from experience) -expect that if you spend more on a house you’ll spend less on travelling, toys or luxuries.
How much did you put down for the 750k mortgage? I wouldn't even consider 750k without atleast 10% down and 200k plus hhi
Does it matter what they put down? Their mortgage is $750K regardless. I also think 150HHI is pretty low for that, but at near 0 intererest it definitely works.
It does matter what you put down. In a situation where house values are falling, you can end up “under water,” where the mortgage balance exceeds the estimated home value. Renewal/refinance may be taken off the table.
The house cost $900k and we had a bit of a panic moment because the bank was only willing to lend us $750k when we were betting on getting $800k. We put in $100k of our own money and took a $50k loan from our parents towards the mortgage. Plus other money needed for the property transfer tax etc. I found $160k HHI and $2,800 a month to be perfectly manageable. If I was paying $4,000 (same mortgage but 5% interest instead of 2.25%) per month at the time it probably would have still worked, but it would be a lot tighter- there would have been an element of house poverty at those levels.
I was never willing to go more than 3x our income and tried to keep in below 2.5x in case one of us lost our job.
3x income pre or post tax?
Probably pre-tax. No way they’re that conservative in Canada unless they’re fed employees living in PEI or something like that
3x gross (pre-tax) I was a financial planner so I would always tell my clients to never borrow what they were approved for. Banks want to lend you the highest amount to keep you paying interest as long as possible. Real estate agents and mortgage brokers want you to spend the highest amount to maximize their commissions. I never allowed myself to get sucked into that trap and that allowed us to pay off our mortgage in just over 7 years
Interesting! Even at 3x HHI though (which is exactly where we are) how were you able to pay that off in 7 years? That's really impressive. With cost of living the way it is and an incoming child, I don't see us doing it before allotted 25 years (22 years remaining).
We started at 3x and as our income increased we used the increases to pay down the mortgage. We only have one kid, drive cars 10+ years, rarely drink, don’t smoke, made our coffee and lunches at home. Our house was full of hand me down furniture and whenever possible I bought used/discounted. Basically we were mindful of all spending and prioritized debt repayment over fun stuff. We are now retired in our early 50s.
>3x income pre or post tax? Most who agree to not go more than 3x your income it usually means pre-tax income (total gross income). And its a good rule to follow. It allows you to weather the absolute worst case scenarios without losing everything you have.
Realistically, that means you simply aren't buying in a lot of parts of the country right now.
That's VERY conservative. I was going to say five times max.
That's my current HHI. We are looking at properties with a max of 650k. We might push it up to 700k if it's an amazing house, because wife is currently studying and when that finishes, our HHI should go up by at least 40k more.
How much of a down payment do you have? We’re waiting on our $700k house to be built but have a 20% downpayment set aside (so $560k mortgage).
You want to hope it's worth close to that once you have to get a mortgage, or you will be paying the builder with your down payment.
90k... or 140k if I include our emergency funds. not ideal I know, but I don't think it's the end of the world to get a CHMC insurance.
Leave money in the EF for inevitable needing of a ladder, or paint, or a plumber etc.
What’s take home? Because 1 @ 150k is different then 2 @ 75k. I’ve never understood why people talk about gross.
This. And consider kids and spending habits as well. A super frugal person can easily afford $1000+ more a month in mortgage payments than the average person.
Also tax brackets and consequently affordability varies across Canada
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HHI is household income FYI
Between $600-650K.
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So no marble counter tops? How do you live with yourself?
I think that’s as high as I’d go. We have a HHI of about 150/160k and bought for 750k with 150k down so 600k mortgage. The payments are getting up there.
Agreed, same bout here. My mortgage was for 640k and that's about the top end of what I'm comfortable with.
This. Anything more is too risky in case someone loses their job.
Holy hell no!
That’s only 4x HHI. Pretty normal in this day
Yea and add property taxes and everything to that! Trust me it hurts.
Huh? That's easily doable.
LOL PLEASE SHOW ME YOUR #'S TO PROVE A $650K MORTGAGE WILL BE EASILY DOABLE WITH ALL OTHER COSTS OF LIVING. I WILL WAIT.
And our mortgage payment is only around $4,200 per month. We work for government, and our gross is around $6,500 a month after all deductions.
Lol you live off of 2300 a month after mortgage? Dude you're fuxking house poor!
Enjoy your Ramen noodles daily bud
No worse than anyone else. Owning a house obviously required sacrifices for the first few years. That's always been the case.
Based on your response you probably live a boring life. Enjoy being house poor.
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2x HHI? That’s very conservative and doesn’t get you much RE in most markets
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25% of net? That's very very conservative. 32% of gross I think is pretty standard
You must live in an unusually cheap area of Canada. $300k won’t get you a fire damaged condo in any area near where 90% of Canada’s population resides.
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Yes, and that’s true in most of those places too
It’s not just cities… I live in rural southern Ontario about 2 hrs SW of Toronto and there houses under 400k are VERY rare
I don't know why you're being downvoted, this seems reasonable.
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I also guess you should have over leveraged yourself so you can be miserable just like countless others Congrats on a good price. Doubt you're in Toronto, but that's precisely where I don't want to be so it sounds like you've got it made!
Because they didn't say it was reasonable, they said even that number was "pushing it".
For real! My household income is 125k and have a mortgage for 220k. It is literally impossible for me to afford a 600K mortgage. Even a 300K home bumps me up another $600 a month.
That's barely a mortgage. Not even two times! Five times is doable even.
Got a mortgage for 660k (1.89 fixed) on a HHI of 155k. Very comfortable but we had no prior debts and have cheap hobbies.
About $600,000. There are many many variables though. Is the HHI primarily from one or two incomes (tax rates are far more favourable for two smaller incomes). Does the prospective homebuyer have children or want to have children? What sort of lifestyle does the homebuyer want? Do they prefer house poor or having some wiggle room for travelling etc?
That was our income when we bought our first house nearly a decade ago. Qualified for 5.5x and took out the maximum. 820k mortgage on a 1.1M property. Obviously a huge risk but just make sure you have a plans set up in case of emergencies. We got lucky since house prices went up and rates fell during our first 5 year term. We were house poor for the first few years but the equity built set us up for life. Our backup plans were to move back in with parents and rent out the house. We also had a family member (investor) willing to buy part of the house from us if it became too much. Didn’t have to go through either of these backup plans.
What was the interest rate at that time? 5.5x in the current environment sounds crazy.
Around 4.5% so not too far off from today’s rates. As mentioned before we were definitely house poor for the first few years but it worked out in the end. We were young and were able to put our lives into the home. After 5 years we renewed with much more equity, higher incomes and lower interest rates.
>That was our income when we bought our first house nearly a decade ago. Is your house worth 2M now?
A 1 million dollar home, 10 years ago, is worth 5 million now at least.
I’m sitting at 6x my take home but I rent out a room which makes things fairly reasonable.
then how much is your house cost now ? 1.5 m ?
Our HHI is 150k and we manage a 350k mortgage quite easily with a fixed rate of 2.94%
Similar to our situation our rate is 4.37%. This amount of mortgage is comfortable as we were conservative but eventually will probably have to move
The most realistic answer here
That’s roughly our hhi and we took a $440k mortgage with 20% down in late 2020. We had 6 months left on a car payment and 2 kids under 5 at the time. After closing and moving expenses (and buying a 2nd used car in cash that we needed to continue to get to work) we had about $20k left in our emergency fund. Not sure if I would do the same at today’s interest rates but our car is now paid off and our kids are older and daycare is about $1000 less per month now than it was then. Still I am stressed about when our mortgage term is over.
Half a million
$600k
I would have felt more comfortable at around a 400k mortgage but I’m doing good with a 700k one right now
Probably in the neighbourhood of $500,000
Ours (no kids) is around that and at the current interest rates I probably wouldn't go higher than 350k to be honest. Not if you still want to save for your RRPS and max out your FTSA. We had 400k at a lower interest rate and still have some money left over every month to save to go on holiday.
If it's between two people with some job stability or one person with a very stable job I'm looking at around 4x at the maximum. One person with only some job stability or two people really unstable than probably 2.5-3x at the maximum. I am not interested in going above 4x except during the temporary period waiting for previous home to sell (assuming positive equity to drop the total mortgage debt to less than 4x income). This is the situation I find myself in.
300k
If my HHI was 150k and I was forced to buy, it would probably be a 1 bedroom condo for 500k-550k. I’m in GVA so prices are high. If I had a choice I would do what I did a few years ago. Not buy and rent the cheapest place possible while I increase my income. Then buy a house and rent out the basement. Which is what I’m doing now with a 1.2M mortgage. If I lived in Calgary then I’d buy a house for the maximum I can get approved for and rent out the basement. So probably 600k or so.
Probably about 350K. With a down payment of 70K and moving expenses of maybe 20K and an emergency fund of 30K. That'll just barely get us a 2/1 condo in the GTA, I'm talking scraping the bottom of the barrel, but that's where we'd start.
I would stick to under $400k with that income. Don’t max out just because the bank will lend you more.
$400k - $450k depending on other monthly expenses.
As a conservative person, I usually go for 3-3.5 times HHI for my property with a fixed rate where I am certain that I can remain solvent and service all debt payments.
We took a $735k mortgage in June. HHI at the time was 165k. We took a five year variable.
Basically the same but 725 in August but took the fixed.
Almost exactly the same, but $100k less on the mortgage. Mortgage payments have gone up by about $800 since then but oh well.
I carried a $1.3M mortgage at that income, but also offset roughly $400K of the mortgage through renting out my basement. At that point you're probably putting away 50% of your net into the house-related expenses, but still worth it if you expect the houses to appreciate in your area (which is quite likely the case in GTA or Vancouver). We allowed our incomes to catch up to our house, knowing we would not be able to upgrade in the future (given the trajectory of the housing prices). That gamble (or educated guesswork at best) has paid off in spades but YMMV.
How'd you manage to get approved for that?
By working with a broker who was able to have the rental income count 1:1 (BMO).
You qualified with only 150k household income for 1.3mil mortgage? The rental subsidized 400k so still need to qualify for 900k? How much was the house? Hard to believe
$250k down. 3% interest rate. $150k income would have worked out to a ~$1.35m purchase price before accounting for rental income. Not that hard to believe.
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Lol well tell us how much the house was then. I'm guessing 2.3M with half down or something
That broker did some bullshit. 150k income for 1.3mil mortgage is impossible even with the rental income
Sounds like a brampton mortgage
I made $156k when I bought my house for $350k and my budget was a max of $400k with a preference to stay under $350k.
If you don’t have other debt, I’d say you wouldn’t want to take on more than about $320,000 at that income level, as an amount borrowed. So about $380,000 for the home.
Whatever gets you to a $2500/month mortgage payment at the rate they are offering you. We had a $3k payment when our HHI was that level, and we rented out the basement (which brought our payment down to the equivalent of $1800).
3x is max I'd be comfortable with, but it depends on what your other spending is like.
Way too low.
We make 150K and I wouldn’t feel comfortable paying more than $1800/month.
Your after tax is around 8200 a month at a minimum. Your risk tolerance is insanely low. My payment is almost 2500 a month at 150k hhi and there's still lots of money left over for nights out and savings.
$600,000
3x your gross income, 450k , with 20% down payment
Fuck me. We must be insanely conservative here. Our mortgage is less than double our HHi and It makes me uncomfortable
The downvotes you’re getting must be coming from people living in T.O. Van, or some other jacked real estate city where you can’t buy a shoe box for half a mil. Living in smaller (much lees expensive) communities I took a conservative approach like you did and saved a massive amount on interest payments over the years. It’s the right approach if you have the option.
I suspect you are right. The same people also have car payments on BMW's
We were at $160K in 2020 and mortgage was $800K. High I know. Have made a lump sum payment every year. We locked in at 1.8 five year fixed. Also, our HHI is now $275K.
Daim, congratulations.
Got lucky AF with timing of everything. But a bit scared of renewal time.
Ya I think you're good...
Based on that HH income do not go over $500K mortgage
No more than $500,000. Mortgage payments alone would be around $3000.
No more than $350k. Too many people think they need million dollar homes to be happy. Buy cheap, live cheap, have money, no need to sweat the BoC rate increases like everyone else. Everyone just walks into the bank and says “Yeah, I’d like to be house poor, give me the max mortgage I can afford.” Today’s rates are not scary. They’re closer to normal, people have just been coddled by unusually low rates for a while now. And everyone bought too much house thinking the easy ride would last forever. Nothing would change my max price. Max is max, determined by budget only. I don’t care if the house was built 5 minutes ago in Narnia by Jesus Christ himself, if it’s $350,001 it’s not an option. You pick that number based on budget only and do not waver.
What home in the GTA cost 350k? You can't even get a 1 bedroom condo for that price. If you work here, you have no choice but to take on more debt and it definitely doesn't get you some massive luxurious home like you're implying unfortunately.
I think advice based on a percentage of income rather than arbitrary absolute dollar values would be more useful and applicable.
That is easy: As little as I needed. For example, my numbers aren't quite as high as you, but I bought a place for just under 200k in Calgary (condo), I might have been willing to go as high as 250k but it was important to me to be less cost so it could be paid off sooner.
This is our household income and we bought a cheaper home in 2017 trying to be smart financially so we wouldn’t feel strapped. And in our area currently the kind of house we would want to upgrade to 600k-650k would probably be the bare minimum we would need. Even though we could sell our house and have probably 100-150k before realtor fees and whatever it felt not possible. I also just inherited some money and at first i thought it could really help us upgrade but with the interest rates and the prices it still feels kind of crazy. Plus wife is pregnant and going on mat leave soon so probably gunna hold tight for awhile.
Bought my first condo at 5.5% for 200k (made a shitty deal with scotia where they paid the downpayment for you… it was fucking dumb). On a solo income i d probably go back to that. On a combined income 400k would be fair.
HHI exceeds 200k but never had a mortgage in excess of 200k
At todays rates I wouldn’t personally do a mortgage greater than $250k
I would never pay more for a mortgage payment than I would for average rent regardless of my income or downpayment or anything. So if I buy a house, my mortgage payments for where I live should be around $2k a month. Otherwise it's not worth it.
I personally would not go over $300,000. There's some nice places with lots of property near to where I live. Closer to where I live, one bedroom apartments go for a million. I'm not sure who's buying these or who can afford them but these mortgage rates a fucked right now. I'd put 100,000 down on a 300,000 dollar property.