Buying a Home? Here’s How to Budget for the Right Price

Buying a home is one of the biggest financial decisions you'll ever make. But before you start browsing listings and dreaming about your perfect home, it’s important to determine how much you can actually afford. A well-planned budget ensures you make a smart and sustainable investment. Here’s how to break it down.

1. Calculate Your Total Monthly Income

Your affordability starts with knowing your total monthly income. This includes your salary, bonuses, side hustles, and any other sources of income. Lenders typically use your gross (pre-tax) income to assess how much mortgage you qualify for.

2. Factor in Your Down Payment

A larger down payment reduces your loan amount and monthly payments. In Canada, you’ll need at least 5% down for homes under $500,000 and 10% for the portion above $500,000. If your down payment is less than 20%, you’ll also need to pay mortgage insurance.

3. Consider Additional Homeownership Costs

Beyond your mortgage, homeownership comes with added costs:

Property Taxes – Varies by location and property value.
Home Insurance – Required by lenders and protects your home.
Maintenance & Repairs – Experts suggest budgeting 1-2% of your home’s value annually.
Utilities & Strata Fees – Water, electricity, gas, and possible condo fees.

4. Get Pre-Approved for a Mortgage

A mortgage pre-approval gives you a realistic idea of how much you can borrow based on your income, credit score, and debt levels. It also helps you lock in an interest rate for up to 120 days.

5. Be Realistic and Stay Flexible

Just because you qualify for a certain mortgage amount doesn’t mean you should max out your budget. Consider your long-term financial goals, lifestyle needs, and potential changes in income or expenses.

Final Thoughts

Affording a home isn’t just about getting approved for a mortgage—it’s about ensuring you can comfortably manage the costs while still enjoying financial stability. By following these budgeting guidelines, you can make a confident and informed decision when buying your home.

Need help figuring out your numbers? Reach out to us for expert advice on mortgage planning!