Do You Need a High Income to Buy a Toronto Home?

Buying a home has always been one of the most significant investments anyone could ever make. That’s why family and friends alike considered the first home such an impressive accomplishment. In recent years, this milestone has become more difficult to achieve, especially in the GTA.

Housing prices have risen dramatically, and I often hear people lamenting that “only the rich can buy houses now.” This brings us to the question, do you need to have a high income to buy a house in Toronto? In this post, I’ll do my best to open up new possibilities no matter where you stand right now.

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An Impossible Dream or Achievable Goal

Many would-be home buyers believe the market is so inaccessible that the thought of owning a house in the GTA doesn’t even occur to them. This is especially true for the younger generations. Here’s a true story that perfectly illustrates the point, although names have been changed to protect the “innocent,” of course!

“Allan” is a family friend who immigrated to Canada several years ago. He worked at a factory alongside his wife and 19-year-old son. They were far from rich, but all three earned a decent income and were renting a house in the GTA. When he came for a visit, I noticed he was driving a brand new BMW X4.

The car was obviously his pride and joy, but seeing him in it sent my inner real estate agent into a spiral. I asked him, “Why on earth would you buy a fancy, expensive car while you’re still renting in Toronto?”

He said he’d never be able to afford a house anyway, so he might as well treat himself to something nice. I knew the whole family was generally good with money, so his answer floored me. I immediately put him in touch with my mortgage broker who worked his magic and got him approved. Now it was Allan’s turn to be stunned.

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Resources You May Not Know About

He assumed that he’d never be able to buy a home due to high real estate prices and the fact that he wasn’t wealthy. Like many of my clients, he had no idea how many options were available to him. That’s why his dream car felt so much more attainable than his dream house. In his case, we were able to add both his wife and his son to the mortgage application, and they soon found themselves moving into a home of their own.

Not long after, the market took off. One of the neighbours sold their house (which was almost identical to Allan’s) for hundreds of thousands more than his family paid for it. He was relieved and grateful that I had given him the push he needed to buy when he did. As real estate values rose, his equity grew. They love their home, but they are also in an excellent position if they ever decide to upgrade. Doors are now open that would never have been accessible without that first purchase.

Putting additional family members on a mortgage application is only one way for first-time buyers to ease their way into the market. Just think of all of the other resources and government programs available to you.

For example, the Home Buyer’s Plan and First-Home Savings Accounts are two valuable resources for anyone who has money tucked away in a tax-sheltered investment. There are other possibilities you may not even be aware of until you explore all of your options with a knowledgeable real estate professional.

A listing agent is only too happy to help you with your home purchase. However, you should always have expert representation of your own. Learn why in Why You Shouldn’t Buy a Home Directly from a Listing Agent.

Savings or a High Income?

A high income may be an enviable luxury, but it doesn’t even necessarily help when the time comes to buy a house. In my opinion, it’s a shame that financial literacy isn’t taught in schools. And I really have seen it all during my years living in GTA and trying to help people navigate this market to invest or buy .

You might think your neighbour or colleague with the cottage, boat, Mercedes and $400,000 a year income is in a better financial position than you. However, so many people are so leveraged out that they cannot get another dollar in credit. Many are also one small mishap from a total collapse.

Contrast that with a couple where each makes a modest $60,000 each year, but they are good with money and excellent savers. Often, they have more in the bank and more available credit than someone who is making over $ 400 000 a year.

The bottom line is that you do need access to capital to buy a house in Toronto and GTA area. High real estate prices mean there is no way around that. However, financial literacy and being a good saver can matter even more than the numbers on your weekly paycheque.

A comfortable down payment, regular and steady income, and expert guidance can be the winning combination that gets you into a home of your own – sooner than you may have thought possible.

Do you want to explore the possibility of homeownership? I am happy to help you determine the best path for you. Reach out today to 647.620.2882 or email OMarjanovic@kw.com to talk about your next steps.