By Sean Cooper on November 25, 2021

How much you need to earn to afford a home in Toronto and the GTA

By Sean Cooper on November 25, 2021

You'll need around $115K in annual household income for a condo.

Photo by Super Straho on Unsplash

Looking at the Greater Toronto Area (GTA) housing market through an analytical lens of percentages, shifting sales numbers and interest rates may be the go-to method for industry insiders, but for many run-of-the-mill buyers, there’s really one thing that matters: “What can I afford?”

First, let’s calculate the income levels someone (or a household) in the GTA would need to purchase a home, based on average house, townhouse and condo prices in 2021.

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Income needed by property type

What kind of a home can you afford? That depends on your income. Here we looked at prices for the entire GTA (both the 416 and suburban 905 area codes) by property type, based on Toronto Regional Real Estate Board (TRREB) data for the first 10 months of 2021.

There’s no denying that these numbers are high compared to previous years, thanks to a housing shortage and rising home prices during the pandemic (in fact, many Torontonians have moved outside of the city even though some are moving back). Also, these are “averages,” so it is possible to find a single-detached home for less—and, yes, even more—than what is listed here.

Across the GTA	Average home price	Household income needed	Monthly mortgage payment
Single-family detached	$1,408,500	$237,000	$5,160
Single-family attached	$1,098,900	$186,000	$4,030
Townhouse	$784,000	$134,000	$2,870
Apartment/Condo	$669,000	$115,000	$2,450

How much income you need, based on municipality

Along with providing a broad overview of the region’s market, we also dug up TRREB numbers on a per-city basis, looking into prices for all property types—pooling together attached and detached houses, townhouses and condos. Here’s what we found for the 25 municipalities that make up the GTA.

Municipality	Average home price	Household income needed	Monthly mortgage payment
Ajax	$944,300	$160,000	$3,460
Aurora	$1,180,100	$199,000	$4,320
Brampton	$969,900	$164,000	$3,550
Brock	$629,300	$108,000	$2,300
Burlington	$1,186,400	$200,000	$4,350
Caledon	$1,245,400	$210,000	$4,560
Clarington	$857,900	$146,000	$3,140
East Gwillimbury	$1,238,700	$209,000	$4,540
Georgina	$777,000	$132,000	$2,850
Halton Hills	$1,191,300	$201,000	$4,360
King	$1,730,000	$291,000	$6,340
Markham	$1,304,400	$220,000	$4,780
Milton	$1,255,300	$212,000	$4,600
Mississauga	$1,051,300	$178,000	$3,850
Newmarket	$1,019,500	$173,000	$3,740
Oakville	$1,388,600	$234,000	$5,082
Oshawa	$784,200	$134,000	$2,870
Pickering	$1,023,700	$173,000	$3,750
Richmond Hill	$1,359,600	$229,000	$5,000
Scugog	$942,700	$160,000	$3,450
Toronto	$1,151,000	$195,000	$4,220
Uxbridge	$1,182,500	$200,000	$4,330
Vaughan	$1,283,000	$216,000	$4,700
Whitby	$1,005,400	$170,000	$3,680
Whitchurch-Stouffville	$1,361,100	$229,000	$4,990

What you need to earn to buy a home in Toronto—how it’s calculated

If you’ve secured a pre-approval before, it’s likely a mortgage professional has already put your finances to the test using the gross debt service (GDS) ratio. If so, then this is a reminder, and if not, this is a good explainer.

The GDS is calculated by adding up all your expenses (mortgage payments, utilities and taxes) and dividing that number by your entire household income. If your GDS works out to be 39% or less, a property officially falls within your price range, according to the Canada Housing and Mortgage Corporation. That said, some lenders may limit you to a lower GDS ratio, depending on your credit score.

Then there is GDS ratio’s cousin: The total debt service (TDS) ratio. TDS is similar to GDS, but it has one key difference: It adds any other debt obligations you may have to your housing expenses, before dividing it by your entire household income. It is an important calculation because it can impact how much you qualify for to spend on a home. Most mortgage lenders let you have a TDS ratio of up to 44%.

For the above chart, to identify the salary you need to buy an average home, we did a reverse calculation and applied the 39% rule to average home prices. The TDS ratio was not included, because we cannot take a borrower’s other debt obligations into account since it can vary from person to person. It’s important to note that these numbers may be different for you, if you are currently carrying a lot of debt.

The calculations also factored in down payments of 20%, which is more reflective of repeat buyers who’ve already built up equity from a previous property and first-time home buyers with sizeable down payments. We also factored in a benchmark rate of 5.25% for the mortgage stress test, a 25-year amortization, estimated annual property taxes of 0.75% of the purchase price and $100 per month for heating. A 5-year fixed mortgage rate of 2.69% was used.

The bottom line

It’s important to note, our data is meant to provide a broad look into the market and factored in average sold prices. There are still some properties out in the market that sell for below the market average, and of course, some that sell above the market average.

Simply put, there are generally options out there for a variety of home buyers and incomes. If you’re wondering about average home prices and the level of income you generally need to make them fit within your budget, these numbers can serve as a useful guide. Bear in mind that sound financial planning can go a long way in helping you achieve your goals. In other cases, you may need to make some compromises if you expect to keep to your budget.