How much income do you need to buy a home in Canada? A look at housing affordability in May 2025

After an unseasonably chilly spring housing market, green shoots are appearing in terms of buyer demand—and that could mean days are numbered for easy borrowing conditions.

The latest data from the Canadian Real Estate Association revealed that, after six months of declines, sales firmed up between April and May, increasing 3.6%. While still early days, the uptick in activity has prompted optimism from the national board that home buyers have come to terms with tariff-imposed uncertainty, and are finally coming off the sidelines.

That increase had led to rising average home prices in a number of Canadian markets, the likes of which are already eroding mortgage borrowing conditions, according to the latest Affordability report released by Ratehub.ca. This monthly snapshot of markets across Canada found affordability worsened in eight of 13 major urban centres.

The study, which uses national real estate data, changes to mortgages rates, and the mortgage stress test rate, defines affordability by the amount of income a buyer would need to earn to qualify for a mortgage on the average-priced home in their market, along with changes to monthly mortgage payments.

Similarly to April, affordability was most impacted by shifting home prices in May, as mortgage rates were largely unchanged over the course of the month; the average five-year fixed rate and corresponding stress test rate used in Ratehub.ca’s calculation remained the same at 4.38% and 6.38%, respectively.

Elevated five-year Government of Canada bond yields—which have remained above the 2.8% range since mid-May—have kept a firm floor under fixed mortgage rates, dissuading lenders from passing on any further discounts. Variable mortgage rates are also likely to remain unchanged in the coming months, as the Bank of Canada (BoC) counters sticky core inflation and economic resilience; the central bank has opted to keep its trend-setting overnight lending rate at 2.75% in its most recent June and April announcements.

Housing affordability across Canada’s major cities

The chart below shows how affordability evolved between April 2025 and May 2025, in Canada’s main housing markets, based on the income required to qualify for a mortgage. Income required is based on the stress test rates of 6.38% in both April and May, along with a mortgage rate of 4.38%.

May 2025: Home affordability report

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Canadian cities where affordability improved

Where in Canada is owning a home becoming more affordable?

Given the lack of relief offered by stagnant mortgage rates, the markets with the most improved affordability in May were those that saw declines in the average home price. According to the ranking, this included a mix of cities in Ontario’s Greater Golden Horseshoe, as well as in British Columbia, where sales continue to lag. 

Hamilton: Firmly in a buyers’ market

Hamilton has hovered at the top of Ratehub’s ranking in recent months, as buyer activity has been well offset by a surge in new listings. The Realtors’ Association of Hamilton Burlington reports that while sales rose 13% on a monthly basis, they remain 37% below what’s typical for May. Meanwhile, a total of 2,319 new listings were added to the market during the month, which kept the region’s sales-to-new-listings ratio (SNLR) at 40%—well within buyers’ market territory.

That’s led to an $18,300 drop in Hamilton’s average home price from April, to $783,100. As a result, the average required income to qualify for a mortgage decreased by $3,480, while the monthly average mortgage payment fell by $93, to $3,973.

Vancouver: Still out of budget

WouMay was another cool month for Vancouver home sales, leading to further price declines. According to the Greater Vancouver Realtors (GVR), sales were down 18.5% on an annual basis, and 30.5% below the 10-year average. New listings, meanwhile, sit nearly 10% higher than the seasonal average, up 3.9% year over year. That’s kept Vancouver’s SNLR at a mere 33.7%, signalling the market is skewed in favour of buyers.

While still Canada’s most expensive market from a dollar perspective, Vancouver buyers paid $7,500 less on average for a home in May than in April, at a price of $1,177,100. Though that’s helped whittle the required income by $1,420, and the monthly mortgage payment by $38, to $5,973, it’s still steep enough to pose a significant affordability hurdle for buyers.

Victoria: Stable and well-supplied

Demand remains robust for Victoria real estate, but an influx of fresh supply has kept the market fairly balanced. According to the Victoria Real Estate Board, sales were largely unchanged on an annual basis, but rose a whopping 18.1% compared to April. However, “ample choice” supported stability among prices, preventing buyer competition from heating up.

As a result, buyers in Victoria paid $4,600 less for an average-priced home in May compared to April, at $892,700. That translated to a required income $870 lower, and the monthly mortgage payment falling by $23 to $4,530.

Canadian cities where affordability worsened

Eight of 13 cities saw affordability worsen in May—compared to six in April—and the largest month-over-month price increases were seen in markets that have remained financially more accessible to buyers, priced at the $600,000 threshold.

St. John’s: No sales dip here

Unlike other Canadian major markets, home sales haven’t taken a breather in St. John’s; according to the Newfoundland and Labrador Association of Realtors, transactions in the city rose 29.5% year over year in May, well outpacing stagnant activity throughout the rest of the province. Much of those sales were concentrated in the pricier single-family home sector, with house sales up 21.2% from May 2024.

Those strong sales pushed the average home price in St. John’s up by $8,900 month over month, to $378,300. For someone applying for a mortgage, that meant their required income rose by $1,690, and that they could expect to pay $45 more each month on their mortgage, at an average payment of $1,919.

Halifax: Sticky prices despite softer sales

While year-over-year activity in the Halifax-Dartmouth region was largely stagnant, with sales down by 1%, home prices have yet to slip, posting a 4.7% increase, according to Nova Scotia Association of Realtors. This was reflected in the $7,600 monthly increase in the average home price, to $570,600. That means someone vying to buy a home in the east coast city would need to come up with $1,430 more in annual income in May than they would have in April, with the average monthly mortgage amount rising by $38 to $2,895.

Regina: Strong from a long-term perspective

Regina home sales, while slowing 3% on an annual basis, are quite strong from a long-term perspective, up 23% above the 10-year trend, according to the Saskatchewan Realtors’ Association. Meanwhile, the number of new listings, while remaining in line with historical trends for May, fell to just 1.8 months of supply heading into June, which has put upward pressure on the average home price; it increased by $5,400 month over month to $340,800. 

That led to the required income to qualify for a mortgage on the average Regina home increasing by $1,020, and the monthly mortgage payment rising by $27 to $1,729.

How much mortgage can you afford? How much house can you buy?

Ratehub.ca’s affordability report provides a month-over-month snapshot of how affordability conditions evolve, using the required income to qualify for a mortgage as a benchmark. The study takes into account changes in the average five-year fixed mortgage rate, mortgage stress test rate and real estate prices to crunch its monthly affordability ranking across 13 of Canada’s largest urban housing markets.

If you’re on the house hunt and want to determine your own mortgage affordability, check out the MoneySense mortgage affordability calculator.

What’s next for Canadian mortgage rates in 2025?

Canada’s mortgage rate outlook is still hazy; trade uncertainty and growing geopolitical concerns have done little to budge government bond yields—which largely set the pricing for fixed mortgage rates—in either the US or Canada. Typically, bond yields fall in times of economic uncertainty, as investors seek out so-called “safe haven” investments. That increased demand makes the bond more valuable and gives lenders—who hold plentiful bonds as part of their asset mix—the room to pass those cost savings down to mortgage rate shoppers.

However, these government-backed vehicles have lost some of their lustre in recent months. Tariff volatility and unsustainable fiscal debt have made investors more wary of US-backed investments, which has caused the yield on the US 10-Year Treasury—an important global benchmark for bonds—to remain elevated. That’s put upward pressure on Canadian bond yields too, though fixed mortgage rates have yet to increase; the lowest five-year insured option (available for buyers who put less than 20% down on their home purchase) in Canada remains 3.84%, while uninsured borrowers can still access five-year fixed terms as low as 3.89%.

Variable mortgage rates, meanwhile, are expected to fall another 50 or so basis points of a percentage, as economists expect two more quarter-point cuts from the BoC this year. The timing, however, is tricky; the central bank has had to carefully weigh the potential economic impacts of Mr. Trump’s trade war with progress in Canadian inflation; the most recent April Consumer Price Index print showed the core measures of which have not decreased the way the BoC hoped. Both the central bank—and borrowers—will be looking carefully at any incoming economic data, such as jobs, GDP, and retail sales, to gauge whether the economy needs more stimulus at this time—and rates won’t be going anywhere if they determine otherwise.

Read more about mortgage affordability:

• Where to buy real estate in Canada
• The complete guide for first-time home buyers in Canada
• Tools to calculate your mortgage payments and costs in Canada
• Mortgage refinance calculator
• Mortgage renewal calculator

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