How Much Mortgage Can I Afford in 2025? Budgeting Beyond the Stress Test

Mortgage Affordability in 2025: How Much Can You Really Afford in Canada?

Thinking of buying a home this year? One of the most important steps in your journey is understanding how much mortgage you can actually afford. In 2025, affordability is more than just a pre-approval number—it’s about creating a budget that aligns with your lifestyle, goals, and financial future.

How Lenders Calculate Affordability (and Why It’s Not the Full Picture)

When you apply for a mortgage in Canada, lenders use the stress test to ensure you could still afford your payments if rates were 2% higher than today. While this helps protect you from future rate hikes, it doesn’t factor in your day-to-day expenses, financial plans, or comfort level.

Just because you're approved for a $700,000 home doesn’t mean that’s what you should buy. Affordability should include:

• Monthly housing costs (mortgage, taxes, insurance)

• Utility bills and maintenance

• Car payments and transportation

• Groceries, childcare, subscriptions, and entertainment

• Savings, debt repayment, and retirement contributions

Why 2025 Is the Time to Re-Evaluate Your Budget

With interest rates expected to shift in late 2025 and inflation still affecting cost of living, Canadians need to be proactive. Home prices may appear stable, but your monthly expenses can sneak up fast if you don’t plan ahead.

Start with a full review of your income and spending habits. Can you still meet your obligations if mortgage rates rise again? Are you planning to grow your family or take time off work? These life decisions impact affordability just as much as your credit score.

When to Recalculate (and Get Advice)

• Before house-hunting: Use a mortgage affordability calculator that factors in all monthly expenses.

• If your income changes: Promotions, job changes, or side hustles can all shift your budget.

• After a rate update: The Bank of Canada’s decisions can impact how much you qualify for.

Final Thoughts: Buy Smart, Not Just Big

At Arise Mortgage, we don’t just help you get approved—we help you find the right number that keeps your financial health intact. Let’s build a mortgage strategy that supports your life, not just your lender’s math.

Talk to a licensed mortgage broker today to create a plan that fits your real budget.