Canadian people are having a hard time purchasing homes these days for several important reasons. Even though affordability has improved somewhat in certain markets, buying a home is still out of reach for many Canadians, especially first-time buyers.
1. Home prices are still very expensive
Even where prices have declined, homes remain expensive compared with average incomes. Saving enough for a down payment can take many years, particularly in major cities.
The problem is not simply the price of the home—buyers also have to consider mortgage payments, property taxes, insurance, utilities, maintenance and closing costs.
2. Mortgage payments are much higher than a few years ago
Higher borrowing costs have made a major difference in what Canadians can afford.
A buyer may be able to qualify for a mortgage on paper, but the monthly payment can still be too expensive for their household budget. CMHC says high borrowing costs continue to be a major factor limiting housing demand and affordability.
3. Incomes have not kept up with housing costs
One of the biggest problems is the gap between:
🏠 The cost of buying a home
and
💰 The income needed to comfortably afford it
Even Canadians with good jobs may find that their income has not increased enough to keep up with housing prices and overall living expenses.
CMHC identifies modest income growth as one of the factors continuing to hold buyers back.
4. Saving for a down payment is difficult
Before buying, Canadians often need to save:
- A down payment
- Closing costs
- Legal fees
- Moving expenses
- Emergency savings
At the same time, many people are paying high rent and dealing with increasing everyday expenses. This makes saving for homeownership much more difficult.
5. Canada still does not have enough housing
Housing supply remains one of Canada’s biggest long-term problems.
According to CMHC’s latest Housing Supply Report, Canada still faces a significant housing supply gap and would need substantially more homes built each year to restore pre-pandemic affordability.
Simply put:
Too many people need housing, while affordable homeownership options remain limited.
6. Construction costs are high
Builders are also dealing with:
- High land costs
- Expensive materials
- Labour costs
- Financing costs
- Municipal fees and development costs
- Economic uncertainty
These costs make it difficult for developers to build homes at prices that average Canadians can easily afford.
7. Mortgage qualification rules can limit buyers
Even if someone can afford a monthly mortgage payment, they may not qualify for the amount they need through a traditional lender.
Buyers may have challenges related to:
- Income verification
- Self-employment income
- Debt levels
- Credit history
- Mortgage stress-test requirements
- Limited down payment
This can leave some Canadians in a frustrating situation where they have money coming in and can make payments, but still don’t meet all traditional lending requirements.
8. Economic uncertainty makes people nervous
Many Canadians are also cautious because of concerns about:
- Job security
- Inflation
- Interest rates
- The economy
- Future housing prices
CMHC says economic uncertainty, high borrowing costs and slow income growth continue to keep many potential buyers on the sidelines.
Private Lender Inc. Has a Financing Solution: Bundle Mortgages
A Smart Financing Solution When Traditional Bank Financing Doesn’t Fit
Buying a home can be challenging when conventional mortgage requirements don’t align with your circumstances. But having a substantial down payment can open the door to additional financing possibilities.
With a minimum 20% down payment, a Bundle Mortgage may be an option worth exploring.
A Bundle Mortgage combines a first and second mortgage on the same property, creating a flexible financing structure that may help bridge the gap when a traditional mortgage alone doesn’t provide the financing needed.
At Private Lender Inc., we work to find practical mortgage solutions based on your property, down payment, and overall financial circumstances.
20% Down Payment? Let’s Explore Your Options.