How Much Mortgage Can I Get on a $70,000 Salary?

By Connie Graham and Briana Hennigan |

Best Mortgage Broker Edmonton

 

It's one of the most common questions people type into Google, and it's a good one. Before you fall in love with a listing, you want to know what's realistic.

 

The honest answer is "it depends," but that's not very helpful on its own. So let's walk through the actual math lenders use, with example numbers, so you can see how the pieces fit together.

 

A quick note: the numbers below are illustrations, not a quote or an approval. Your own situation (debts, down payment, credit, the property itself) will change the result.

The two ratios lenders care about

Lenders look at two ratios when they decide how much you can borrow.

 

Gross Debt Service (GDS): your housing costs as a percentage of your gross income. That's your mortgage payment, property taxes, heating, and half of any condo fees. For insured mortgages, the limit is generally 39%.

 

Total Debt Service (TDS): your housing costs plus all your other debt payments, like car loans, credit cards, and lines of credit. The limit is generally 44%.

 

On a $70,000 salary, that works out to:

 

  • GDS limit: about $2,275/month for housing costs

  • TDS limit: about $2,567/month for housing plus all other debts

The stress test changes the math

You don't qualify at the rate you'll actually pay. You qualify at a higher "stress test" rate: the greater of your contract rate plus 2%, or 5.25%.

 

So if your mortgage rate were 4.5%, the lender would check whether you could afford the payment at 6.5%. This is designed to make sure you'd be okay if rates rise at renewal. It's frustrating when you're trying to buy, but it's there to protect you.

Putting it together: two example scenarios

Let's assume property taxes of about $300/month and heating of about $100/month, which are reasonable ballpark figures for a modest Edmonton home.

 

Scenario A: $70,000 income, no other debts

 

  • Room for a mortgage payment: about $1,875/month (the $2,275 limit minus taxes and heat)

  • At the 6.5% qualifying rate over 25 years, that supports a mortgage of roughly $280,000

  • With 5% down and mortgage insurance added, that points to a purchase price in the low-to-mid $280,000s

 

Scenario B: same income, plus a $400/month car payment

 

  • The car payment now counts against your TDS limit

  • Room for a mortgage payment drops to about $1,767/month

  • That supports a mortgage of roughly $264,000, a purchase price in the mid-to-high $260,000s

 

That one car payment reduced the purchase price by about $16,000. This is why I often suggest people hold off on a new vehicle until after they've bought their home.

A note on condos: why the fees matter

In Edmonton, a purchase price under $300,000 will often be a condo or a townhouse with condo fees. Lenders include 50% of your monthly condo fees in your housing costs when they calculate your GDS and TDS ratios.

 

Scenario C: $70,000 income, no other debts, buying a condo with $350/month in fees

 

  • Half the condo fees ($175) now count against your housing limit

  • Room for a mortgage payment drops to about $1,700/month

  • That supports a mortgage of roughly $254,000, a purchase price in the mid-to-high $250,000s

 

That's about $26,000 less borrowing power than the same buyer purchasing a home with no condo fees. The higher the fees, the bigger the gap.

 

Condo fees aren't a bad thing. They often cover exterior maintenance, snow removal, landscaping, and sometimes utilities, which can save you money elsewhere. But when you're comparing listings, a lower price with high fees isn't always the better deal. It's worth looking at the fees, and the health of the condo's reserve fund, before you fall for a unit.

What about a 30-year amortization?

If you're a first-time buyer (or buying a newly built home), you may be eligible for a 30-year amortization on an insured mortgage. In Scenario A, stretching to 30 years lifts the mortgage to roughly $299,000.

 

That can open up more options, but a lower payment isn't the same as more affordable. You'll pay more interest over the life of the mortgage. It can still be a smart choice, especially if you plan to make prepayments when your income grows. It's just worth choosing on purpose, not by default.

What if there are two of you?

If you're buying with a partner, lenders combine your incomes. Two incomes of $70,000 roughly double the numbers above, less any combined debts. This is where many Edmonton buyers find the market very workable. Our benchmark price has been sitting in the low $400,000s.

The number that matters most

Here's what I tell every buyer: the maximum a lender will approve and the amount you're comfortable paying each month are two different numbers.

 

The approval is the ceiling. Your budget should be based on your life: childcare, savings goals, travel, the car that will eventually need replacing. I'd much rather help someone buy a home they can enjoy than one that makes every month feel tight.

Your next step

If you'd like to see these numbers with your income, debts, and down payment plugged in, send me a quick note with the basics. I'll walk you through what's realistic, and what's comfortable, before you start looking at listings.

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