Did you that the median household income in Ottawa is just over $100K before tax? Wondering how much home you can buy based on your household income? Keep reading, the answers may surprise you!
Minimum wage
If you make minimum wage in a full-time position, you’re making roughly $31K before tax. In Ottawa, this situation means you’re unfortunately priced out of the market… by yourself at least. If purchasing a home is your goal, make sure to take steps now to plan for the future and set yourself up for success.
- Pay down debt on any credit cards, your car loan, outstanding bills, etc.
- Find ways to save money using the appropriate savings vehicles
- Partner up with someone like a family member or group of friends as cosigners to boost the combined income being used for qualification
Two to four people each making $31K before tax could buy a property that will house all four people while building equity as a group! If you have family support or are willing to sacrifice a little bit of space and privacy (like you would be in an apartment), you can start building your home equity now. Why not get something instead of nothing?
There are a couple of considerations in cases where commission income is involved. Since lenders are only interested in what they can bank on, your base salary is what will be used. The general rule of thumb is that four times your salary is the mortgage you can get. For someone with a base salary of $30K, this means you could get a mortgage of $120K. So, even though you technically make more, you’ll still need some extra support.
Income of $50-$70K
If you make between $50K to $70K a year before tax, you’re well on your way to being able to afford your first home! The key in this income range is to get your combined household income to $100K. To be fair, a $30K or more raise is much easier said than done BUT you can ask someone who makes $30K or more per year for help.
Teaming up with someone is the easiest option here and it could be a romantic partner, friend, parent, grandparent, or even a co-worker. If we can get that total income up to $100K, there are so many more options available in terms of possible homeownership!
Income of $100K
If you make $100K in combined income a year, then you can buy a pretty sweet condo in Ottawa (which averages around $385K)! Assuming a minimum down payment of 5% ($19,250) on a 25-year amortization, $3K in annual property taxes, and $450 monthly in condo fees, your monthly payment will be just over $2,200 (assuming an interest rate of 4.99%). That’s probably a lot less than what you were thinking right?
Income of $130-$150K
If you make between $130K to $150K in combined income per year, then you can get yourself a townhome or semi-detached in Ottawa. Let’s use the average of $527,700 with a minimum down payment of $27,970, on a 30-year amortization and $5K in yearly property tax. On a variable rate of 4.99%, you’d be looking at a mortgage payment of about $3,031 per month!
Income of $150-$200K
Wondering how much income you need to buy a million-dollar home in Ottawa? If you make between $150K to $200K in combined income, then congratulations, you pretty much can! Assuming a 20% down payment (which in this case you would need) on a 30-year amortization, and roughly $8K a year in property tax, your monthly mortgage payment would be about $4,433 (on a variable rate of 5.34%).
If your combined household income for the past two years is $200K, using the income times four rule, you’re in shape for a pre-approval on $800K no problem (assuming good credit). If you’re looking to get a penthouse condo, home in town, or maybe a bigger place and property outside the city, you’ve got options in this income range!
Everyone’s income situation and homeownership goals are different. Contact the Kyle Miller Mortgage Agent team today to learn more about your options!
Recent Comments