Editor's Note: This story originally appeared on Point2.
Buying a home is a hurdle race, and the down payment is the first — and possibly most discouraging — obstacle. That’s because, for many, the traditional 20% is simply out of reach. For others, even 5% seems utopian. So, what about a 50% down payment? Or even 80%?
Realistically speaking, these are the numbers that potential homebuyers need to contemplate. In order to get an affordable mortgage — meaning one that wouldn’t eat up more than 30% of their income — buyers would have to cover what the loan doesn’t, which could represent much more than the traditional 20% that everyone expects.
Whether they’re single or a couple, covering the difference between the home price and the mortgage is an incredible financial effort.
And, based on the 50/30/20 rule (where 20% of one’s income should go toward savings), it’s a lengthy one, as well: It would take years upon long years putting away 20% of each paycheck to save enough to buy a home, so home seekers could rightfully start feeling like homeownership is not an attainable goal.
Plus, speaking in percentages doesn’t even begin to describe the tough conditions in Canada’s most expensive urban centers: In the 16 cities where the benchmark home price is higher than $1 million, even a starter home (priced at half the local composite price) seems out of reach.
However, a few of Canada’s largest cities are breaking this bleak trend and emerging as real homeownership havens: There, no matter if they’re single or coupled, first-time buyers have an almost equal chance at becoming homeowners without spending their entire lives saving for their home. Let’s take a look.
Saving for a Home in Canada
So, which Canadian cities had the shortest saving timeframes for singles and couples? And were there any large urban hubs where single buyers could save up in as little time as couples?
If they want an affordable mortgage, saving enough money to cover the difference between the price of a starter home and the bank loan would take both single and coupled homebuyers quite a few years.
- 4 or 29 Years: The nationwide average to save enough for a starter home (meaning a home half the composite price) is now nearly four years for couples and close to 29 years for single people.
- 3 to 75 Years: That’s how much time a buyer on a single income would need to cover the difference between the affordable bank loan and the starter home price in Canada’s 70 largest cities.
- 2 to 27 Years: Couples fared better, but would still need 27 years at most to save enough in the priciest markets, as compared with less than two years in 11 of Canada’s largest and more affordable cities.
Top Cities Where It’s Fastest for Singles and Couples to Save for a Home
They say that if you want to go fast, you should go alone, and if you want to go far, you’d better partner up.
However, some large cities across Canada seemed to disprove this proverb.
Despite the income disparity, both single homebuyers and couples looking for a home would need very similar periods of time to save enough to cover the amount left after calculating the maximum affordable mortgage loan.
1. Strathcona County, AB
- Starter Home (half the composite): $188,500
- Afforded Mortgage by Couples: $373,997
- Remaining Amount for Couples: $37,700
- Couples Save In: 1 year and 9 months
- Afforded Mortgage by Individuals: $173,618
- Remaining Amount for Individuals: $37,700
- Individuals Save In: 3 years and 6 months
- Difference in Time to Save: 1 year and 9 months
2. Regina, SK
- Starter Home (half the composite): $149,900
- Afforded Mortgage by Couples: $318,377
- Remaining Amount for Couples: $29,980
- Couples Save In: 1 year and 7 months
- Afforded Mortgage by Individuals: $126,737
- Remaining Amount for Individuals: $29,980
- Individuals Save In: 3 years and 4 months
- Difference in Time to Save: 1 year and 9 months
3. Lévis, QC
- Starter Home (half the composite): $157,218
- Afforded Mortgage by Couples: $295,808
- Remaining Amount for Couples: $31,444
- Couples Save In: 1 year and 10 months
- Afforded Mortgage by Individuals: $134,612
- Remaining Amount for Individuals: $31,444
- Individuals Save In: 3 years and 7 months
- Difference in Time to Save: 1 year and 10 months
4. Red Deer, AB
- Starter Home (half the composite): $162,901
- Afforded Mortgage by Couples: $302,901
- Remaining Amount for Couples: $32,580
- Couples Save In: 1 year and 10 months
- Afforded Mortgage by Individuals: $122,480
- Remaining Amount for Individuals: $40,421
- Individuals Save In: 4 years and 11 months
- Difference in Time to Save: 3 years and 1 month
5. Saguenay, QC
- Starter Home (half the composite): $133,250
- Afforded Mortgage by Couples: $250,187
- Remaining Amount for Couples: $26,650
- Couples Save In: 1 year and 9 months
- Afforded Mortgage by Individuals: $95,639
- Remaining Amount for Individuals: $37,611
- Individuals Save In: 5 years and 2 months
- Difference in Time to Save: 3 years and 5 months
Singles vs. Couples: Saving Up for Homeownership
The following are the cities with the biggest difference in the years needed for singles and couples to save for purchase of a starter home.
1. Richmond Hill, ON
- Starter Home (half the composite): $706,650
- Afforded Mortgage by Couples: $245,995
- Remaining Amount for Couples: $460,655
- Couples Save In: 26 years and 9 months
- Afforded Mortgage by Individuals: $80,273
- Remaining Amount for Individuals: $626,377
- Individuals Save In: 74 years and 9 months
- Difference in Time to Save: 48 years
2. Newmarket, ON
- Starter Home (half the composite): $590,400
- Afforded Mortgage by Couples: $285,787
- Remaining Amount for Couples: $304,613
- Couples Save In: 15 years and 8 months
- Afforded Mortgage by Individuals: $87,411
- Remaining Amount for Individuals: $502,989
- Individuals Save In: 57 years and 1 month
- Difference in Time to Save: 41 years and 4 months
3. Vaughan, ON
- Starter Home (half the composite): $664,750
- Afforded Mortgage by Couples: $273,765
- Remaining Amount for Couples: $390,985
- Couples Save In: 21 years and 1 month
- Afforded Mortgage by Individuals: $99,879
- Remaining Amount for Individuals: $564,871
- Individuals Save In: 61 years and 1 month
- Difference in Time to Save: 39 years and 12 months
4. Vancouver, BC
- Starter Home (half the composite): $628,482
- Afforded Mortgage by Couples: $359,688
- Remaining Amount for Couples: $268,794
- Couples Save In: 12 years and 10 months
- Afforded Mortgage by Individuals: $140,615
- Remaining Amount for Individuals: $487,867
- Individuals Save In: 52 years and 6 months
- Difference in Time to Save: 39 years and 8 months
5. Markham, ON
- Starter Home (half the composite): $655,000
- Afforded Mortgage by Couples: $252,814
- Remaining Amount for Couples: $402,186
- Couples Save In: 23 years and 4 months
- Afforded Mortgage by Individuals: $96,888
- Remaining Amount for Individuals: $558,112
- Individuals Save In: 62 years and 8 months
- Difference in Time to Save: 39 years and 4 months
Saving Up for Homeownership in Canada
The following are the overall stats for how long it takes to save up to buy a home in select Canadian cities.
1. Toronto, ON
- Starter Home (half the composite): $526,750
- Afforded Mortgage by Couples: $299,873
- Remaining Amount for Couples: $226,877
- Couples Save In: 11 years and 10 months
- Afforded Mortgage by Individuals: $105,579
- Remaining Amount for Individuals: $421,171
- Individuals Save In: 47 years and 9 months
- Difference in Time to Save: 35 years and 11 months
2. Montréal, QC
- Starter Home (half the composite): $259,392
- Afforded Mortgage by Couples: $270,909
- Remaining Amount for Couples: $51,878
- Couples Save In: 3 years and 2 months
- Afforded Mortgage by Individuals: $103,066
- Remaining Amount for Individuals: $156,326
- Individuals Save In: 20 years and 11 months
- Difference in Time to Save: 17 years and 9 months
3. Calgary, AB
- Starter Home (half the composite): $285,050
- Afforded Mortgage by Couples: $335,400
- Remaining Amount for Couples: $57,010
- Couples Save In: 2 years and 10 months
- Afforded Mortgage by Individuals: $139,811
- Remaining Amount for Individuals: $145,239
- Individuals Save In: 15 years and 6 months
- Difference in Time to Save: 12 years and 7 months
4. Ottawa, ON
- Starter Home (half the composite): $311,950
- Afforded Mortgage by Couples: $351,210
- Remaining Amount for Couples: $62,390
- Couples Save In: 2 years and 10 months
- Afforded Mortgage by Individuals: $134,873
- Remaining Amount for Individuals: $177,077
- Individuals Save In: 16 years and 11 months
- Difference in Time to Save: 14 years and 1 month
5. Edmonton, AB
- Starter Home (half the composite): $184,500
- Afforded Mortgage by Couples: $329,052
- Remaining Amount for Couples: $36,900
- Couples Save In: 1 year and 11 months
- Afforded Mortgage by Individuals: $135,060
- Remaining Amount for Individuals: $49,440
- Individuals Save In: 5 years and 6 months
- Difference in Time to Save: 3 years and 7 months
Methodology
Point2, a division of Yardi Systems Inc., covers real estate trends and news. Point2 studies are based on internal data, public records, governmental sources, online research, and other reliable third-party agencies.
- For this study, we took into consideration the 70 largest Canadian cities, according to the most recent population data from StatCan.
- We used the 50/30/20 rule (where 20% of the income should go towards savings) to calculate and compare the years required to save up for a down payment by both individuals and couples.
- Median income for singles (Non-Census Family Households – Household Size = 1) and couples (One Couple – without children – Household Size = 2) were sourced from StatCan 2020, and were adjusted for 2023.
- Median home prices were sourced from CREA and local Realtor boards. The study considered “starter homes” as those homes that were priced at half the local composite price tag.
- We calculated the mortgage amount that an individual and a couple would be eligible for based on their respective incomes, assuming a monthly mortgage payment (including insurance and taxes) that wouldn’t represent more than 30% of the median income. We also assumed a 5-year, fixed-rate mortgage with an interest rate of 6.39%, which is in line with Canada Mortgage and Housing Corporation, conventional mortgage lending rate, 5-year term for December 2023, with an amortization period of 25 years.
- Tax rates were sourced from Forbes; Homeowners insurance values were sourced from Moneysense.
- We then calculated the difference between the maximum affordable mortgage and local starter home price (also referred to as down payment) needed to save to purchase a starter home. In situations where the down payment was less than 20% of the starter home price, we defaulted to a minimum of 20%.
Add a Comment
Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.