According to CMHC, the average home price in Canada is now over $700,000. Sadly, it is even higher in BC. Now, if you are earning $150k in one year, financially, you’re in a strong position.
So, naturally, it might come into your mind that “how much mortgage can I afford at a 150k salary?” That’s what we are here to discuss. Let’s break it down for you.
Can I Afford a Mortgage with a $150K Salary?
If your salary is $150,000 per year, you can afford a mortgage between $650,000 to $750,000. However, this will depend on many factors. Your debt, credit score, and down payment all play a role here.
Lenders throughout Canada estimate this amount based on standard affordability guidelines.
Let’s say you earn $150,000. But, you have the following:
- Monthly debts: $500
- Down payment: $120,000
- Interest rate: 5.5%
- Amortization: 25 years
In this case, you can afford a home in the range of $750,000 to $850,000. The mortgage will amount to $650,000–$700,000, depending on the exact figures. This gives you room to explore options in Surrey and the surrounding areas!
How Do Lenders Calculate This?
So, how do banks or private lenders make this decision? If you want to know- how much mortgage can I afford with a $150k salary in Canada, consider the following:
1. GDS and TDS Ratios
Lenders use your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios. This is to make sure you don’t take on more than you can handle. Your GDS needs to be under 35% of your gross monthly income. And your TDS should be less than 42%. This will include your total debt payments.
2. Monthly Income Breakdown
If you earn $150K/year, your gross monthly income is about $12,500. That means your housing costs should stay under about $4,375/month. That totals 35%.
Here, you’ve to consider mortgage payments, property taxes, and heating as well. If it’s a condo, then 50% of the fees as well.
3. Down Payment Size
If you have a large downpayment size, you can be more flexible. A 20% rate for downpayment can help you avoid CMHC mortgage insurance. You can also qualify for a larger loan.
4. Interest Rates Matter
The average fixed rate is 5.5%. At this rate, your mortgage size is much more limited. It can be higher when rates are lower. Keep in mind that rates don’t stay the same. You just have to work with a professional like Asim Ali to calculate your affordability in real time.
Final Thoughts
So, how much mortgage can I afford on a 150k salary? That will be based on current conditions. You can expect about $650,000–$750,000.
If you’re ready to get accurate, personalized numbers, don’t guess. Talk to a trusted advisor. Asim Ali and the team can walk you through the process and secure the best rates available.