Personal Finance

How much do I need to make, in order to afford a 500k home in Vancouver?

  • Last Updated:
  • Nov 23rd, 2011 12:31 pm
Tags:
None
[OP]
Member
User avatar
Mar 3, 2008
471 posts
14 upvotes
Vancouver

How much do I need to make, in order to afford a 500k home in Vancouver?

Hi guys,

Quick intro: bachelor in psychology, unemployed last couple of years, live in Vancouver, planning my future and considering what kind of work/education I need given my values/goals.

Anyhow, I can't find any good info on this, but given that I want to own a house and start a family at some point, I want to calculate what kind of money I need to make so I can become a homeowner. I think a two-bedroom house is good though three bedrooms is ideal. The houses/condos I have seen in the past, located in safe, decent neighborhoods, were between 300k-700k. Obviously there are additional charges, taxes, fees, etc, and then money put aside to maintain the house.

So, what kind of money do I need to make?
36 replies
Deal Expert
User avatar
Nov 15, 2004
16797 posts
2581 upvotes
Toronto
Probably 500k.


Why are you planning on buying a 3-bedroom house if you're (presumably) in your early to mid 20s and in a market as overpriced as Vancouver? You can have one or two kids in an apartment and then move into a house when they're old enough to remember things. The correct answer for your salary question is 'as much as you can'. There isn't any incentive to slack off at a certain point. To consider locking yourself down with a house when you're unemployed and thinking of starting a family 'at some point' is not smart.
Could HAVE, not could OF. What does 'could of' even mean?
[OP]
Member
User avatar
Mar 3, 2008
471 posts
14 upvotes
Vancouver
The sad truth is that I'm not in my early 20s. I'm 33. I'm just trying to figure out what kind of job I need; to estimate if I need to make 3k, 5k, or 10k a month, to have the life I want to have (in the long run). Of course, the next would be if I can actually find such a job; if I have the talent, intelligence, connections, and discipline to do the work or complete the course of study.

I had a tedious and mindnumbing part time job in college where I just made photocopies and filed papers alphabetically. It was torture. But it was only two days a week and for about a thousand bucks, I did what I had to do. But now I'm looking at careers and thinking long term. And something important to me is to have a place of my own. And a family. And provide for that family.
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
well assume you have to buy a house right now for 500k, include tax and fees
also assume 30% down payment 150k, amortize over 25 year, 2.40% rate, you will need 58,149 annual income for them to approve mortgage.
which is not too bad, a little under 5k/month...a bus driver make more than that...

i get this from mortgage calculator from hsbc, and i think it can be lower.
Deal Addict
Aug 28, 2010
3521 posts
1218 upvotes
Halifax
ccyk wrote:
Nov 20th, 2011 5:33 am
well assume you have to buy a house right now for 500k, include tax and fees
also assume 30% down payment 150k, amortize over 25 year, 2.40% rate, you will need 58,149 annual income for them to approve mortgage.
which is not too bad, a little under 5k/month...a bus driver make more than that...
This would be a mortgage which is 6 times his income, which is insane. There are plenty of people in Vancouver doing it, but it's still insane.

You can't assume interest rates are going to stay low for the whole 25 years of the mortgage. The chance of that happening is very close to zero.
Deal Expert
May 30, 2005
41970 posts
2772 upvotes
Richmond Hill
FunSave22 wrote:
Nov 20th, 2011 9:26 am
This would be a mortgage which is 6 times his income, which is insane. There are plenty of people in Vancouver doing it, but it's still insane.

You can't assume interest rates are going to stay low for the whole 25 years of the mortgage. The chance of that happening is very close to zero.

+1

I suggest 2.5-3X annual income to be on the safe side.

On a 500K house, that means OP should be making 166-200K a year before considering such a house.

OP, instead of figuring out how much you need to make to afford such a house, shouldn't you be considering whether or not you can get a job in the first place? You've been unemployed for the last couple years...
***Brand New Apple TV 4th Gen 64GB ONLY $220!!***
Silver Coins | Apple TV 4th Gen 64GB | Philips Wake-Up Light with Radio
Heatware | RFD Feedback
Deal Addict
Jan 19, 2011
2757 posts
947 upvotes
Jon Lai wrote:instead of figuring out how much you need to make to afford such a house, shouldn't you be considering whether or not you can get a job in the first place? You've been unemployed for the last couple years...

I think the OP has got things in the wrong order... Kind of like deciding which exotic Italian sports car to buy when working part time at 7-11 or Mac's...

Time for the OP to go to the local Employment Office (whatever the federal government department is called nowadays) and sit down with an employment councellor about setting reasonable goals, improving employability, and getting started down some sort of career path.

I would suggest entering a field that the OP might enjoy, based on his personal experience so far.
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Deal Addict
Feb 20, 2006
1171 posts
42 upvotes
Vancouver
fieldhousehandyman wrote:
Nov 20th, 2011 12:41 pm
I think the OP has got things in the wrong order... Kind of like deciding which exotic Italian sports car to buy when working part time at 7-11 or Mac's...

Time for the OP to go to the local Employment Office (whatever the federal government department is called nowadays) and sit down with an employment councellor about setting reasonable goals, improving employability, and getting started down some sort of career path.

I would suggest entering a field that the OP might enjoy, based on his personal experience so far.
I think it's a reasonable approach, assuming there is, for the OP, a tradeoff between rewarding/enjoyable work and highly paid work. I.e., the higher up the pay scale you go, the less happy the OP would be with the type of work. It that case, it's reasonable to determine "how much is enough" and not aim higher than that, rather than trying to "make as much as possible" at the cost of your own happiness.

It's the same kind of decision you make if you have a job where the numbers of hours worked are variable and up to you (e.g., jobs with lots of available, voluntary, overtime). The right answer isn't always "to work as much as possible".
Deal Fanatic
Apr 15, 2004
5434 posts
78 upvotes
Toronto
What is your obsession with house ownership? You should really give up this dream. It's not possible.
[OP]
Member
User avatar
Mar 3, 2008
471 posts
14 upvotes
Vancouver
ccyk wrote:
Nov 20th, 2011 5:33 am
well assume you have to buy a house right now for 500k, include tax and fees
also assume 30% down payment 150k, amortize over 25 year, 2.40% rate, you will need 58,149 annual income for them to approve mortgage.
which is not too bad, a little under 5k/month...a bus driver make more than that...

i get this from mortgage calculator from hsbc, and i think it can be lower.

Thank you for that info. So need to make +5k/month.

I thanked everyone who contributed to this thread but want to make a few points.

Jon Lai says I should be making about 150k to 200k/yr in order to consider such a house. But that's insane! So only doctors and very successful businessmen can afford a 500k house? Is it this bad in other countries, I wonder. This means that a large portion of people working full time in Canada can't afford to buy a house (or maybe they partly own a house which they don't know they can't afford in the long run..if that makes any sense).

For several posters including Jon Lai who say I should focus on getting a job first: It just doesn't work like that. I did have jobs but could afford **** with them. One was the lowly mindnumbing filing job. Then there were the occasional research assistantships and so forth at the college, which were more interesting but barely paid more. I don't want to live on 2k a month, doing the kind of work that I hate.

So that's why I'm considering the price of investing in long term college education. I have no particular talents, am not handy nor have the sort of skills (aggressive, energetic, driven) that make someone succeed in business and sales. And I have tried. So I can't be the plumber who did not go to university but who charged me fifty bucks just to come and take a look at the pipes for ten minutes, nor be some guy with the fierce handshake and knack for selling cars. I know someone who never went to college but as a car salesman in his 20s, he's making about 60k a year his second year on the job, is married and paying mortgage on a decent house. So given my lack of skills, specifically ones valued by the market, I need to invest in college education. But in order to do that, I need to have goals. Those goals determine the answer to my questions: Do I need to go for PhD vs masters? Should I go in this field or that? How to balance doing something that I love with making good money, enough to reach most of my goals.

I wish the answer was as simple as "doing what you love". I enjoy writing poetry for instance. But what if it never gets published? Do I enjoy sending my poems to hundreds of magazines, with their different criteria, requiring different formats, taking months to get back to me, and the 1% that accept my work, paying me in peanuts? No! Also, I hate not having any money, and I hate bills. Now, the other side of the coin about doing what you love is having what you love: I do love to have a nice car, a nice computer, nice home, to go on vacations, etc. To get them, I may require to study hard, to do some things all day that I hate, but then the payoff is nice. So I have to find a happy balance where I do some things I enjoy during the day (say, help people and make their life better) and of course some things that I hate (say, paperwork, or dealing with upset people), and then in return buy a house--maybe not a great one but a decent one, with a decent car, and also not worry about the bills. House is one. Having a car that does not break down every two weeks is another. I hope this clarifies my intention.
Deal Fanatic
User avatar
Mar 20, 2009
8862 posts
2673 upvotes
Vancouver
You found a $500K home in Vancouver? What is it, a converted dumpster? :D
Deal Addict
Aug 28, 2010
3521 posts
1218 upvotes
Halifax
aras wrote:
Nov 20th, 2011 6:35 pm
Jon Lai says I should be making about 150k to 200k/yr in order to consider such a house. But that's insane! So only doctors and very successful businessmen can afford a 500k house? Is it this bad in other countries, I wonder. This means that a large portion of people working full time in Canada can't afford to buy a house (or maybe they partly own a house which they don't know they can't afford in the long run..if that makes any sense).
You must realize that Vancouver is an exception and nearly all of the rest of the country doesn't have prices anywhere near Vancouver's.


If you are going to try to buy a $500k house while making $5k per month, I really hope you have a job you love. Because after paying all of your bills and necessities you aren't going to have much left to spend on anything else.
Deal Expert
User avatar
Nov 15, 2004
16797 posts
2581 upvotes
Toronto
aras wrote:
Nov 20th, 2011 6:35 pm
Thank you for that info. So need to make +5k/month.

I thanked everyone who contributed to this thread but want to make a few points.

Jon Lai says I should be making about 150k to 200k/yr in order to consider such a house. But that's insane! So only doctors and very successful businessmen can afford a 500k house? Is it this bad in other countries, I wonder. This means that a large portion of people working full time in Canada can't afford to buy a house (or maybe they partly own a house which they don't know they can't afford in the long run..if that makes any sense).

Most people have some savings they use, so they don't have to finance the entire thing and thus don't have to qualify for a 500k mortgage if they want to buy a house that costs that much. The income figure also tends to be based on two people, not just one, which is another reason why it's folly to be considering a house at this stage. If you want to start a family, start one, then plan for the house you'll keep them in.

Seriously, just find a job first. If you're really only in it for the money go for one of the protected cartel jobs like the police, transit authority, etc.
Could HAVE, not could OF. What does 'could of' even mean?
Deal Addict
User avatar
Dec 26, 2010
1714 posts
747 upvotes
Calgary
So only doctors and very successful businessmen can afford a 500k house?
Buying a half a million dollar house on $58,000/year is crazy. The only way it could be affordable is if you saved for literally a decade for down payment.

Two professional adults (say like a married couple) making $80,000 a year each could afford it.

Top