How Much Income Do You Need to Buy a Condo in Mississauga?How Much Income Do You Need to Buy a Condo in Mississauga?

The most common question first-time buyers ask when looking at the Mississauga real estate market is simply: "Do I make enough money to buy a condo?"

With interest rates and property values constantly making headlines, it is easy to feel overwhelmed. However, getting approved for a mortgage comes down to a few basic mathematical rules used by Canadian banks. Here is how to figure out if your income is ready for homeownership.

The Mortgage Stress Test

Even if your bank offers you an interest rate of 5%, they will not qualify you based on that number. In Canada, all buyers are subject to the Mortgage Stress Test. This means the bank must prove you can still afford your payments if interest rates go up. They will calculate your affordability using your offered rate plus 2%, or 5.25% (whichever is higher).

Because of the stress test, you need a slightly higher income to qualify today than you did a few years ago.

The GDS and TDS Ratios

Lenders use two main ratios to determine if your income is high enough:

Gross Debt Service (GDS) Ratio: Your housing costs (mortgage, property taxes, heating, and 50% of your condo maintenance fees) should not exceed 39% of your gross monthly income. Read our complete breakdown of Mississauga Condo Fees here to see how they impact your affordability.

Total Debt Service (TDS) Ratio: Your housing costs PLUS all your other debt payments (car loans, credit cards, student lines of credit) should not exceed 44% of your gross monthly income.

The Role of Your Down Payment

Your income and your down payment work together as a team. If your income is on the lower side, you can still buy a condo if you have a massive down payment, because you will be borrowing less from the bank.

If you only have a 5% down payment, you will need a higher household income to carry the larger mortgage. Not sure how much cash you need? Read our Mississauga First-Time Home Buyer Down Payment Guide.

How to Boost Your Purchasing Power

If your current income is not enough to buy the condo you want in City Centre, you have a few options. You can pay off existing debts (like a car loan) to lower your TDS ratio, or you can add a co-signer (like a parent) to the mortgage to blend their income with yours.

Find Out What You Can Afford

The only way to truly know what your income can buy is to speak with a mortgage broker and start looking at live inventory.

View Live Mississauga Condos for Sale

Looking for the complete roadmap to homeownership? Return to our **Complete First-Time Condo Buyer Guide **to master every step.