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There's a question almost every buyer asks early in their search: how much can I afford? And while your mortgage broker can tell you the maximum amount a lender will approve you for, that number and the amount you should actually spend are often two very different things.
I see it all the time — buyers get approved for $600,000, start shopping at $580,000, and end up house-poor because no one walked them through the full picture of what homeownership actually costs. Let's change that.
Start With Your Mortgage Approval — But Don't Stop There
Your pre-approval tells you the maximum you can borrow based on your income, debts, and credit. It's a critical starting point. But it's calculated based on qualifying criteria — not on your personal spending habits, savings goals, or the lifestyle you want to maintain.
The question to ask yourself isn't: what's the maximum I can borrow? It's: what monthly housing payment lets me still sleep comfortably at night?
The True Monthly Cost of Owning a Home
Your mortgage payment is the biggest piece of the puzzle — but it's not the only one. When you're calculating what you can afford, factor in all of these:
Mortgage payment: Principal and interest, paid to your lender. This is the number most people focus on.
Property taxes: Collected by your municipality, usually paid annually or built into your mortgage payment if your lender requires it. Rates vary significantly by location.
Home insurance: Required by your lender. Premiums vary based on the home's age, size, location, and your coverage level.
Strata or condo fees: If you're buying in a strata corporation, monthly fees cover shared maintenance, building insurance, and reserve fund contributions.
Utilities: Electricity, gas, water, internet. In a detached home, these are fully your responsibility.
Maintenance and repairs: A general rule of thumb is to budget 1% of the home's value per year. On a $400,000 home, that's $4,000/year — or about $333/month.
The Down Payment Conversation
How much you put down affects more than just your mortgage amount — it also determines whether you'll need to pay CMHC mortgage default insurance.
In Canada, any purchase with less than 20% down requires mortgage insurance, which protects the lender in the event of default. The premium is added to your mortgage balance and increases your total borrowing cost.
• 5% down: Minimum required for homes under $500,000 (graduated above that threshold)
• 10% down: Reduces your insurance premium
• 20% down: No insurance required — this is called a conventional mortgage
If you're close to a threshold, it may be worth pausing your search to save a little more. Run those numbers with your mortgage broker before you decide.
A Simple Budgeting Framework
A commonly referenced guideline is that your total housing costs — mortgage, taxes, insurance, and strata fees — should not exceed 32% of your gross monthly income. Your total debt load, including all loan payments, should stay under 44%.
These are the ratios lenders use to qualify you. But I'd encourage you to build your own budget based on your after-tax income and actual spending patterns. The lender's math doesn't account for your retirement contributions, your kids' activities, or your annual trip to see family.
What If You're Right at the Edge of Affordability?
If your dream home is right at the top of your approval, sit with these questions honestly:
• If interest rates increase at renewal, can you still carry the payment?
• Is your income stable, or is some of it variable or seasonal?
• Do you have an emergency fund that would cover 3-6 months of expenses?
• Are there upcoming life changes — growing family, career transition, aging parents — that could affect your finances?
Buying at the top of your budget isn't automatically the wrong move. But it should be a conscious, informed choice — not something you drift into because the approval number felt like permission.
The best home purchase is one where you feel financially confident long after the moving boxes are unpacked. That's what we're working toward together.
Have questions about the buying process?
I love helping buyers feel informed and confident every step of the way. Whether you're just starting to think about buying or you're ready to dive in, reach out anytime. There are no silly questions here — only ones that lead to better decisions.
Cassie Schellenberg, Personal Real Estate Corporation
Helping buyers navigate the market with clarity, confidence, and zero overwhelm.
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