Real Estate

Buying for the first time...

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  • May 28th, 2021 5:41 pm
[OP]
Member
Sep 23, 2011
236 posts
165 upvotes
Vaughan

Buying for the first time...

Hey folks,

We are getting to a point of wanting to buy a home - maybe towards the end of this year or early next year. This would be the first property for our family.

Our budget situation is a bit complicated...
Gross salary is roughly 150k. I'm the sole breadwinner for the next few years. The plan is for my wife to go back to work part time and she would probably bring in 50k/yr (full time would be 120k-150k but we'd like to avoid that).
With all our expenses we are in the red by roughly 2k every month (rent is 2.7k). I'm only counting my salary less all expenses here.

By now you're probably thinking that we're crazy for even thinking about a purchase but it's not all bad. Before our two kids were born we accumulated some assets and they've done well. The problem is I would like to cash in as little as possible...
RRSPs: 1.1M
LIRAs (can't access those): 300k
TFSAs: 250k
Non-registered: 200k (No issues with cashing this in, we'll have to pay some taxes but very little).
Emergency cash: 50k

We would be eligible for the first time home buyers plan and I was also thinking to pull some money out of wife's RRSP (maybe 50k this year and 50k next year) to pad the down payment.

I'm ok to continue to be cash flow negative for the next few years but obviously don't want to overstretch ourselves. But how big of a mortgage would we be able to get?

Ideally would like to get a detached in Mississauga somewhere between 427 and Hurontario, closer to the QEW. Not looking for a mansion, typical 3 bed/3bath with a nice backyard.

Any thoughts/suggestions on our situation and how to best prepare for the purchase? Main questions are financial but would welcome advice on other fronts as well.

Thanks in advance!
7 replies
Deal Addict
Feb 19, 2019
1290 posts
1835 upvotes
Stouffville ON
As far as affordability is concerned you will be able to qualify for something between $1.1 to $1.3M just with your tfsa, non registered, and HBP.
Drawing some rrsp from the spouse if she has no other income in the year is probably an idea worth considering although I wouldn't suggest drawing large amounts to avoid large tax bill, I would probably consider drawing rrsp on top of the HBP if other amounts were not enough to buy or cover the type of house you have your sights on.

The amount you qualify for may be different than what you are comfortable spending.
Full Time and Full Service Realtor
Sr. Member
Mar 14, 2018
507 posts
530 upvotes
Typically the max mortgage given is 5x the salary. In your case with both working you would be able to borrow 1M. With current variable rates this would probably be about 3.5k per month on mortgage. Let's assume with your wife back to work she brings about 3k after tax per month. Since you are paying 2.7k on rent, I think your wife's additional income can offset the difference (~0.8k) plus the 2k negative cash flow you have.

So the question becomes how much of your savings will make up the downpayment and hence the price of the home. If I were you I would tap into HBP RRSP and your registered funds to spend 270k toward the downpayment and closing costs. So you are looking at 1.2~1.25M property with mortgage amount of 1M max.

Having said owning a house definitely increases your monthly/annual expenditure so you'd have to budget for that. But since you have a large amount of savings I think you would be able to handle any surprise expenses.
Sr. Member
Mar 30, 2017
959 posts
665 upvotes
Saniokca wrote: Hey folks,

We are getting to a point of wanting to buy a home - maybe towards the end of this year or early next year. This would be the first property for our family.

Our budget situation is a bit complicated...
Gross salary is roughly 150k. I'm the sole breadwinner for the next few years. The plan is for my wife to go back to work part time and she would probably bring in 50k/yr (full time would be 120k-150k but we'd like to avoid that).
With all our expenses we are in the red by roughly 2k every month (rent is 2.7k). I'm only counting my salary less all expenses here.

By now you're probably thinking that we're crazy for even thinking about a purchase but it's not all bad. Before our two kids were born we accumulated some assets and they've done well. The problem is I would like to cash in as little as possible...
RRSPs: 1.1M
LIRAs (can't access those): 300k
TFSAs: 250k
Non-registered: 200k (No issues with cashing this in, we'll have to pay some taxes but very little).
Emergency cash: 50k

We would be eligible for the first time home buyers plan and I was also thinking to pull some money out of wife's RRSP (maybe 50k this year and 50k next year) to pad the down payment.

I'm ok to continue to be cash flow negative for the next few years but obviously don't want to overstretch ourselves. But how big of a mortgage would we be able to get?

Ideally would like to get a detached in Mississauga somewhere between 427 and Hurontario, closer to the QEW. Not looking for a mansion, typical 3 bed/3bath with a nice backyard.

Any thoughts/suggestions on our situation and how to best prepare for the purchase? Main questions are financial but would welcome advice on other fronts as well.

Thanks in advance!
1) Respect for the large RRSP & TFSA reserve
2) take advantage of wife's low tax rate right now and take out some RRSP if it can attribute to her as her income.
3) so, TFSA 250k+200k is all you have for down payment without touching RRSP now. You will get a big hit for taking out RRSP in single year. And for wife to take RRSP out tax efficiently will take several years and only if available, about 120k/yr.

so now 450k downpayment, that doesnt get you very far.
150k income can possibly get your about 800k-1M mortgage, ask a mortgage broker.

I'd max out mortgage of what i can afford for the largest house. no way youill want to move if you later find the house to be too small.
It will be way easier when wife works part time down the road.
or can choose to wait a year or 2 for wife to take out rrsp for less mortgage payment or even larger house with higher downpayment.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Addict
Jan 13, 2014
1818 posts
753 upvotes
Calgary
Saniokca wrote: Hey folks,

We are getting to a point of wanting to buy a home - maybe towards the end of this year or early next year. This would be the first property for our family.

Our budget situation is a bit complicated...
Gross salary is roughly 150k. I'm the sole breadwinner for the next few years. The plan is for my wife to go back to work part time and she would probably bring in 50k/yr (full time would be 120k-150k but we'd like to avoid that).
With all our expenses we are in the red by roughly 2k every month (rent is 2.7k). I'm only counting my salary less all expenses here.

By now you're probably thinking that we're crazy for even thinking about a purchase but it's not all bad. Before our two kids were born we accumulated some assets and they've done well. The problem is I would like to cash in as little as possible...
RRSPs: 1.1M
LIRAs (can't access those): 300k
TFSAs: 250k
Non-registered: 200k (No issues with cashing this in, we'll have to pay some taxes but very little).
Emergency cash: 50k

We would be eligible for the first time home buyers plan and I was also thinking to pull some money out of wife's RRSP (maybe 50k this year and 50k next year) to pad the down payment.

I'm ok to continue to be cash flow negative for the next few years but obviously don't want to overstretch ourselves. But how big of a mortgage would we be able to get?

Ideally would like to get a detached in Mississauga somewhere between 427 and Hurontario, closer to the QEW. Not looking for a mansion, typical 3 bed/3bath with a nice backyard.

Any thoughts/suggestions on our situation and how to best prepare for the purchase? Main questions are financial but would welcome advice on other fronts as well.

Thanks in advance!
Before buying i would rather sit down and work out a budget and see why is it in the red. I understand your wife may work down the road, but still thats a maybe at the moment.
[OP]
Member
Sep 23, 2011
236 posts
165 upvotes
Vaughan
masarwar wrote: Before buying i would rather sit down and work out a budget and see why is it in the red. I understand your wife may work down the road, but still thats a maybe at the moment.
Thanks for the comment. The red is a conscious decision. We worked pretty hard to bring the savings up so that when we had kids we could take the foot off the pedal and not stress about finances. I actually took a few years off work as pat leaves and the red there was more like 7-8k/month. The plan is that she will go back to work once our youngest goes to JK, or maybe a year after that (2-3 years from now).

For context, we're both around 40.
[OP]
Member
Sep 23, 2011
236 posts
165 upvotes
Vaughan
senasena wrote: As far as affordability is concerned you will be able to qualify for something between $1.1 to $1.3M just with your tfsa, non registered, and HBP.
Drawing some rrsp from the spouse if she has no other income in the year is probably an idea worth considering although I wouldn't suggest drawing large amounts to avoid large tax bill, I would probably consider drawing rrsp on top of the HBP if other amounts were not enough to buy or cover the type of house you have your sights on.

The amount you qualify for may be different than what you are comfortable spending.
Hmm. Really don't want to touch the TFSA but maybe the answer is cash in a part of it and keep withdrawing 50k from RRSP while my wife's income is low to replenish them as fast as possible.
Member
Dec 23, 2012
473 posts
466 upvotes
RICHMOND HILL
you can probably qualify for quite a bit, some banks (I know scotia at least) can qualify you based on assets. my rough guess would be you could qualify for at least 1.5m, but I would check with a broker that does these often. I recently qualified for low 7 figures with the same salary as you and about half the assets, although they were mostly in non-registered accounts.

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