The 1/3-of-income comfort zone
A lender will qualify you well past this line. Here is the arithmetic for the number that actually lets you sleep.
The calculation
Take gross household income — before tax, both incomes if you're buying together — divide by 3, divide by 12. That's the monthly housing payment you're aiming to stay under.
On $150,000/year: $150,000 ÷ 3 = $50,000/year, ÷ 12 = $4,167/month.
"Housing payment" means the full carrying cost, not just the mortgage: principal and interest, property tax, and strata or condo fees if any. Heat is sometimes included in the standard version (lenders' GDS ratio adds 50% of heating costs); for a comfort-zone number, round up and include it.
Turning the payment into a purchase price
Subtract property tax and strata fees from your $4,167 first — say $300 and $400 — leaving $3,467/month for principal and interest. At a 5% rate on a 25-year amortization, that services roughly $600,000 of mortgage. Add your down payment to get the price ceiling.
The rate and amortization move this number a lot. Run your own figures in the True Cost calculator rather than trusting the round numbers above.
A real example
368–8333 Jones Road in Richmond's Brighouse South — a 3-bedroom attached townhouse — closed at $625,000 (list $648,000). Put 20% down ($125,000) and finance $500,000 at 5% over 25 years: principal and interest run about $2,920/month. Add roughly $160/month property tax and a $350/month strata fee, and the full carrying cost lands near $3,430/month.
Under the 1/3 rule, that payment wants a gross household income of about $3,430 × 3 × 12 ≈ $123,500/year — well under what a lender's GDS/TDS ratios would actually qualify for at that price, which is the point: the comfort-zone number and the approval number aren't the same question.
Why 1/3 and not what the bank offers
Lenders qualify you against GDS/TDS ratios that allow housing costs up to roughly 39–44% of gross income, and stress-test at a higher rate — that's the ceiling of what you can borrow, not a recommendation. 1/3 is a discipline number: it leaves room for the rest of a household budget — savings, an emergency fund, a rate renewal that lands higher than today's — without redesigning your life around the mortgage.
The gap between "what I qualify for" and "what I'm comfortable paying" is usually 15–20% of the purchase price. Know which number you're negotiating around before you make an offer.
Where this breaks down
Variable or commission income, upcoming income changes (parental leave, a return to school), high existing debt payments, or a rate you expect to renew higher all argue for a tighter ratio than 1/3. A stable dual income with no other debt has more room to lean toward the lender's ceiling if you choose to.
The scale: income needed by price
Same assumptions throughout: 20% down, 5% rate, 25-year amortization, plus an estimated property tax and strata fee for that price band. Your own numbers will move with the rate and the building.
| Purchase price | Down (20%) | Est. monthly carrying cost | Income needed (1/3 rule) |
|---|---|---|---|
| $500,000 | $100,000 | $2,810 | $101,000 |
| $625,000 example above | $125,000 | $3,420 | $123,000 |
| $750,000 | $150,000 | $4,080 | $147,000 |
| $900,000 | $180,000 | $4,870 | $175,000 |
| $1,100,000 | $220,000 | $5,900 | $212,000 |
| $1,300,000 | $260,000 | $6,930 | $250,000 |
Plug in your own price and rate →
A few questions to work out your own number
What's my gross household income, really?
Before-tax income, every household member who's on the mortgage. Include reliable variable income (established overtime, average bonus) but leave out anything you can't count on in a slow year.
How much can I actually put down?
Not just savings — subtract closing costs (transfer tax, legal fees, inspection) first. Whatever's left is your real down payment, and it's usually less than people assume. See what buying actually costs.
What monthly debt am I already carrying?
Car payments, student loans, credit card minimums, other financing — a lender counts these against you (TDS), and so should you. High existing debt means your comfort zone should be tighter than 1/3, not looser.
How stable is this income for the next 5 years?
A mortgage is a 5-year commitment at minimum, usually 25. If income is commission-based, one earner plans to reduce hours, or a rate renewal could land materially higher, use a number below 1/3 rather than at it.
Does this include heat, insurance, and maintenance?
The 1/3 figure above covers principal, interest, property tax and strata fees only. Add roughly $150–250/month for a house's utilities and upkeep on top before you call a price comfortable.
Talk to a mortgage broker
A few quick questions and we'll connect you with a broker who can run your actual numbers.
Before you rely on any of this
This is a planning heuristic, not a lending rule or financial advice. Confirm actual qualification with a mortgage broker or lender, who will run your real GDS/TDS against current stress-test rates.
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Updated September 19, 2026 · views