If you're renting in Toronto and thinking about buying one day, you've probably asked yourself:
How much can I actually afford?
It's one of the most common questions I get from future homebuyers, but there isn't one number that answers it.
Your down payment, income, credit, existing debts, monthly budget and mortgage qualification all play a role. And in Toronto, you also need to account for things like the deposit when submitting an offer, two land transfer taxes and other closing costs.
I like to break the conversation into five questions:
1. How much do you have for a down payment?
2. How much mortgage can you qualify for?
3. How much cash will you need to make an offer and close?
4. What will the home actually cost you every month?
5. What monthly payment are you comfortable with?
Let's walk through it.
1. Start with your down payment
Your down payment is the portion of the purchase price you pay yourself rather than finance through your mortgage.
For example, if you're buying an $800,000 Toronto property and putting 20% down:
$800,000 × 20% = $160,000 down payment
That would leave you with a $640,000 mortgage before other adjustments.
But you don't necessarily need 20% down.
For an owner-occupied property in Canada, the minimum down payment is generally:
5% of the first $500,000
10% of the portion between $500,000 and $1.5 million
20% if the purchase price is $1.5 million or more
So on an $800,000 home, the minimum down payment would be:
5% of the first $500,000 = $25,000
10% of the remaining $300,000 = $30,000
Minimum down payment = $55,000
If your down payment is below 20%, mortgage default insurance will generally be required, which affects the overall cost of your mortgage.
Putting more down can reduce your mortgage and monthly payments, but that doesn't necessarily mean you should put every dollar you've saved into your down payment.
You still need money to close the transaction, move into the home and maintain a healthy financial cushion afterward.
2. Talk to a mortgage broker
Before we start seriously shopping for homes, one of the most valuable conversations you can have is with a mortgage broker.
They're the financing experts.
A mortgage broker looks at your overall financial profile — not just your salary — to determine how much you may realistically be able to borrow and get pre-approved for.
They'll typically review things such as:
Your income and employment
Down payment and available savings
Credit history and credit score
Existing loans
Lines of credit
Credit card balances
Student loans
Car loans or lease payments
Other monthly debt obligations
Estimated property taxes
Condo maintenance fees, where applicable
Current mortgage rates
Mortgage stress-test requirements
This is important because income alone doesn't determine your purchasing power.
Two people earning exactly the same salary could qualify for very different mortgages.
One might have almost no debt.
The other might have a $900 monthly car payment, student loans and outstanding credit balances.
Their financial profiles — and therefore their mortgage qualifications — could look very different.
3. Understanding GDS and TDS
Two important calculations lenders use when evaluating your mortgage application are your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.
Gross Debt Service — GDS
Your GDS looks at how much of your gross household income would be required to cover the basic costs associated with the home.
This generally includes:
Mortgage payment + property taxes + heating costs + a portion of condo fees, where applicable
Total Debt Service — TDS
Your TDS goes one step further.
It considers your housing costs plus your other debt obligations.
That can include:
Car payments + student loans + credit card debt + lines of credit + other required debt payments
Your mortgage broker can calculate these ratios, review your credit and financial obligations and help determine how much mortgage you may qualify for.
From there, they can work toward getting you pre-approved for a mortgage.
That gives us a much more reliable budget before we start seriously looking at properties.
4. Your pre-approval becomes the starting point — not necessarily your budget
Let's say your mortgage broker determines that you can purchase a home for up to $850,000 based on your financing and down payment. Great.
Now my job as your Realtor is to help answer the next question:
What does $850,000 actually buy you in Toronto?
Maybe that's a two-bedroom condo in one neighbourhood.
Maybe it's a townhouse farther east or north.
Maybe moving your search by a few kilometres gets you considerably more space.
We'll look at recent comparable sales, neighbourhoods, property types, property taxes, condo fees and other carrying costs to understand what makes sense.
And importantly:
Just because you're approved to spend $850,000 doesn't mean you have to spend $850,000.
Your maximum mortgage qualification and your comfortable budget can be two very different numbers.
5. Be prepared for the deposit when making an offer
This is one of the cash-flow requirements first-time Toronto buyers sometimes don't expect.
When we submit an offer on a property, we will typically include a deposit as part of the Agreement of Purchase and Sale.
In Toronto, a deposit of around 5% of the purchase price is common, although the amount is negotiable and depends on the transaction.
For example:
$700,000 purchase → 5% = $35,000
$800,000 purchase → 5% = $40,000
$1,000,000 purchase → 5% = $50,000
The timing matters too.
Depending on the terms of the Agreement of Purchase and Sale, you may need to provide that deposit very quickly once an offer is accepted.
That's why I want buyers to have their deposit funds accessible before we start making serious offers.
Is the 5% deposit an additional cost? No.
The deposit forms part of the money you're contributing toward the purchase. It isn't another 5% fee on top of your down payment.
For example, imagine you're buying an $800,000 property with 20% down.
Your total down payment would be: $160,000
If you've already provided a: $40,000 deposit
that $40,000 is credited toward the purchase.
This is why there's an important difference between: “I have enough money for my down payment.”
and: “I have enough money available at the right times to make an offer and successfully close.”
6. Toronto buyers need to budget for two land transfer taxes
This is one of the biggest differences between buying inside Toronto and buying in many surrounding municipalities.
If you purchase a property within the City of Toronto, you generally pay:
Ontario Land Transfer Tax + Toronto Municipal Land Transfer Tax
For example, on an $800,000 Toronto property, before any applicable rebates, the land transfer taxes are approximately:
Ontario Land Transfer Tax: $12,475
Toronto Municipal Land Transfer Tax: $12,475
Total land transfer taxes: approximately $24,950
That's almost $25,000 beyond the purchase price that needs to be considered when planning your cash for closing.
What if you're a first-time homebuyer?
Eligible first-time homebuyers may qualify for land transfer tax rebates that can significantly reduce this amount.
Your lawyer should confirm exactly which rebates you qualify for and what your final land transfer tax will be.
7. There are other closing costs too
Land transfer taxes are usually the largest closing expense, but they aren't the only one.
Depending on the property and transaction, you should also budget for:
Real estate lawyer: approximately $1,500–$2,500+
Title insurance and legal disbursements: generally handled through your lawyer and dependent on the transaction
Home inspection: approximately $500–$900+
Closing adjustments: varies depending on prepaid property taxes, condo fees, utilities and other expenses
Moving costs: depends on how much you're moving and whether you're hiring professional movers
And then there's everything that happens after you get the keys.
Furniture. Window coverings. Paint. Small repairs. Appliances. Moving expenses. Maybe that couch you've been eyeing for six months.
You don't want to arrive at closing with nothing left in your account.
8. Let's put the numbers together
Imagine you're purchasing an $800,000 Toronto property with a 20% down payment.
Purchase price: $800,000
20% down payment: $160,000
5% offer deposit: $40,000
This forms part of the $160,000 down payment — it isn't additional.
Ontario Land Transfer Tax: approximately $12,475
Toronto Municipal Land Transfer Tax: approximately $12,475
Legal and title-related costs: budget approximately $2,000–$3,000
Home inspection, if applicable: approximately $400–$700
Then allow additional room for: Closing adjustments + moving expenses + immediate home expenses + emergency savings
So saying: “I need $160,000 to put 20% down.” doesn't quite tell the whole story.
A better question is: “How much cash should I have available to comfortably purchase and close on an $800,000 home in Toronto?”
That's the number we want to plan around.
9. Buying a condo? Look beyond the purchase price
This is particularly important in Toronto. Two condos selling for the same price aren't necessarily equally affordable.
Imagine two condos both cost $700,000. One has maintenance fees of: $450/month, the other: $850/month. That's a $400 monthly difference, or $4,800 per year.
Your condo fees may also affect your mortgage qualification.
So when I'm comparing properties with buyers, I'm not only looking at the listing price.
We're looking at the overall cost of owning it.
That includes your: Mortgage + property taxes + condo fees + insurance + utilities + maintenance
That's your real monthly housing picture.
10. What can you comfortably afford?
This might be the most important question of all.
Your mortgage broker tells us what you can qualify for.
That doesn't automatically tell us what you should spend.
You still have a life outside your home.
Maybe you want to travel.
Maybe restaurants are important to you.
Maybe you're aggressively saving for retirement.
Maybe you're planning to have children.
Maybe you simply don't want most of your monthly income going toward housing.
So instead of only asking:
“What's the maximum mortgage I can get?”
I encourage buyers to ask:
“What monthly housing expense would allow me to own a home and still comfortably live the life I want?”
Then we can work backwards.
You don't need to be ready to buy before starting this conversation
If homeownership is something you're considering in the next 12–24 months, that's actually a great time to start planning.
Talk to a mortgage broker and understand your financing. Then we can look at the Toronto real estate side together.
We can figure out:
What could you qualify for?
What are you comfortable spending?
What does that budget buy in Toronto today?
Which neighbourhoods and property types make sense?
How much should you have available for your deposit and closing costs?
And what can you start doing today to put yourself in a stronger position?
Maybe you discover you're ready sooner than you expected. Maybe you realize you need another year to save, reduce some debt or increase your down payment. Either answer is valuable because now you have a plan.
Thinking about buying in Toronto?
Let's talk about where you are today and what the path to homeownership could look like for you.
I'll help you understand the Toronto market and what different budgets can realistically buy, and a mortgage professional can help you understand the financing and pre-approval side.
No pressure. No commitment. Just good information so you're prepared when the time comes.
Home Is Where Wellness Begins.
This article is for general informational purposes only. Mortgage qualification, GDS/TDS requirements, down-payment requirements, taxes, rebates and closing costs vary based on the buyer, lender and transaction and can change over time. Consult a mortgage professional and real estate lawyer for advice specific to your circumstances.