Information on affordability and down payments

By Erica Marie

A few weeks ago, the Edmonton Community Development Company (ECDC) hosted an open house to showcase their first completed property ready for sale. As part of their Project 10 initiative, a derelict property that used to sit on this land was demolished and a brand-new front-to-back duplex was built. 

Duplex for sale on 9316 109 Avenue

Homeownership is a dream for many families. The four walls symbolize more than just shelter but a place of stability, security, and pride. Considered one of the biggest investments a person makes in their life, the home buying process can prove to be a daunting task. There are a lot of decisions to make in between pre-approvals, touring open houses, and deciding where to live.


Being informed can help alleviate the uncertainties that come with home ownership. Many questions will arise during the process, but an important one to start with when you’re ready to start the journey is, how much house can I afford?


Debt to Service Ratio


An important factor to calculate is your overall debt compared to your total income. This is what lenders refer to as the debt to service ratio. Typically, this should not be more than 40% of your gross annual income (your total income before taxes or deductions).


To calculate your Total Debt Service Ratio (TDS):


TDS = (Housing expenses + credit card interest + car payments + loan expenses + any other debt payments) / annual income


Our day-to-day expenses can add up quickly. Between gas, groceries, and some money left over for entertainment, we need to make sure our housing expenses leave us enough room for our needs and lifestyle choices. Staying within these boundaries ensures that you will be comfortable and able to make the mortgage payments.


For more information on debt to service ratio, click here.


Down Payment


A down payment is a lump-sum payment you make upfront when buying a house. This is subtracted from the home’s overall price, with the mortgage loan covering the remainder of the mortgage payment.


In Canada, the minimum down payment required based on the purchase price of your home is: 

  • $500,000 or less: 5% of the purchase price 
  • $500,000 to $999,999: 5% of the first $500,000 plus 10% for the portion of the purchase price above $500,000 
  • $1 million or more: 20% of the purchase price


*Self-employed or credit history may require the lender to request a larger down payment.


When your down payment is less than 20%, it will require mortgage loan insurance that can be paid upfront or added to your mortgage’s principal amount. Your mortgage loan insurance payment depends on the amount of your down payment. The bigger your down payment, the less you pay for your mortgage loan insurance.


You can also take advantage of home buying programs and incentives such as the Home Buyers’ Plan (HBP). The HBP is available for first-time home buyers and must meet the HBP eligibility conditions. With the HBP, you can withdraw up to $35,000 as an individual, or $70,000 for a couple, from your Registered Retirement Savings Plan (RRSP). You can repay it over a period of no longer than 15 years; otherwise, it is added to the taxpayer’s income.


For more information on down payments, click here.


Looking at all your expenses and tallying up your savings is an excellent way to gauge your readiness in becoming a homeowner.


Here is a tool to help you determine what home price you can afford: Mortgage Affordability Calculator.


You’ve answered the question of how much? Now, the more exciting part is deciding which house to buy. For most, their answer is heavily influenced by location. There are over 300 neighbourhoods in Edmonton. Elements such as proximity to your work, family, and schools contribute to the type of community you want to reside in.


People are embracing the idea of 15-minute communities, and walkability is becoming an important determinant in selecting neighbourhoods. Easy access to everything we need within a 15-minute walk or bus ride helps lower our collective carbon footprint, improves physical health and lets us get to know our neighbours who live and work there.


The ECDC’s property is located in McCauley, one of Edmonton’s most walkable and transit-friendly neighbourhoods. Along with the ECDC, the city has contributed millions of dollars to the community’s revitalization efforts. This duplex is the ECDC’s first of many infill homes that will be built in the neighbourhood. With these new builds, they hope to reintroduce McCauley’s diverse and vibrant community to families and urban professionals who work around the downtown area.

Community members played a role in influencing the design and layout of the house. Feedback the organization made sure to include was a large open deck so that kids could play and interact with neighbours. If you are ready to purchase a home and would like to stay and grow with the community of McCauley, this home offers the perfect blend of functionality and modern finishes. The ECDC aspires to build homes so your family can build memories.  


Book a viewing today – click here!

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