Ottawa's $110,000 household now buys $561,000, not $577,500

What changed since May

In May I published a sample: a couple earning $110,000, no other debt, 20% down, qualifying at 6.05%. The answer was a purchase price of about $577,500. It no longer holds, and the reason is partly the market and partly an error of mine. Both are fixable with arithmetic you can redo.

The inputs, with the one I had to estimate

The 5-year Government of Canada bond yield was 3.60% on October 8, up from 3.36% in August, per the Bank of Canada's own series. In my September look at lender spreads the best 5-year fixed rate sat 65 basis points over that yield. Add them and you get a contract rate near 4.25%, and the stress test adds 2 points, so the qualifying rate is about 6.25%. That contract rate is my estimate, not a lender quote. Your actual rate will differ, and so will your qualifying rate. Everything below moves with it.

The rest is the May setup. GDS capped at 39% of gross income, 25 year amortization, Canadian semi-annual compounding, heat at $120 a month, and Ottawa property tax at 1.1% of price, which is the figure I used in May. Condo fees are left out of the apartment line, and half of them count toward GDS, so a condo buyer needs more than the number below.

Rerunning the $110,000 household

$110,000 a year is $9,167 a month. Times 39% is $3,575 a month for housing. Take off $120 for heat and you have $3,455 for principal, interest and tax.

At a 6.25% qualifying rate, each dollar of purchase price at 20% down costs about $0.005237 a month in principal and interest (that is $0.80 borrowed times 0.006547 per dollar, a factor you can check on any amortization calculator) plus $0.000917 in tax (1.1% divided by 12). That is $0.006154 per dollar of price. $3,455 divided by $0.006154 is about $561,400.

So the same household buys roughly $561,000 now, not $577,500. The gap is $16,100.

Where the $16,100 went

Two things, and they are not equal.

The first is my May error, worth about $7,300. The May example subtracted $483 a month for property tax, which is $5,800 a year, and labelled it the tax on a $700,000 home. A few paragraphs later the same post said Ottawa tax runs about 1.1%. At 1.1% on a $577,500 purchase the bill is $6,353 a year, or $529 a month. Using $483 overstated what the household could carry. Fixing only that, at the old 6.05% rate, the answer is about $570,200.

The second is the rate, worth about $8,800. Moving the qualifying rate from 6.05% to 6.25% raises the payment factor by 1.9%, and that takes $570,200 down to $561,400.

The market itself did almost nothing to this. September benchmark prices from OREB were flat to down on last year. The squeeze is in the stress test, not the sticker price.

What each segment needs in income

Using OREB's September 2026 benchmarks, 20% down, 6.25% qualifying rate, same tax and heat assumptions:

Single family, $705,100: mortgage $564,080, principal and interest $3,693, tax $646, heat $120. Housing $4,460 a month, so income of $4,460 times 12 divided by 0.39, about $137,200.

Townhouse, $546,500: mortgage $437,200, principal and interest $2,863, tax $501, heat $120. Housing $3,483, income about $107,200.

Apartment, $380,800: mortgage $304,640, principal and interest $1,995, tax $349, heat $120. Housing $2,464, income about $75,800 before condo fees.

Read that against the $110,000 household. It clears the benchmark townhouse with about 2.6% to spare, and it is $27,000 short of the benchmark single family. In May I said that income bought you a detached starter in Orleans. At today's benchmark it buys the townhouse, and the detached starter now needs a closer look at what is actually listed under $561,000.

Down payment is a separate wall. 20% of the single family benchmark is $141,020. Of the townhouse, $109,300. The 10% down math from last week applies if you are short.

What moves it next

Every 20 basis points on the qualifying rate costs a single family buyer about $2,100 a year of required income ($137,219 less $135,143 between the 6.05% and 6.25% cases). The Bank of Canada decides on October 28, but a policy cut does not automatically pull the 5-year fixed rate down, because that rate follows the bond market. My September post showed those two drifting apart. If the 5-year yield falls back toward 3.36%, the August level, the qualifying rate drops by roughly the same 24 basis points and the $110,000 household gets back roughly $10,700 of the $16,100.

What I would do with this

Run the sum before you shop, not after. My May affordability post still has the right structure, so use its steps with the corrected tax line. Then get an actual qualifying rate from a lender or broker, and the right answer to "what can I borrow" comes from them, not from me. I sell houses. I do not sell mortgages and this is not mortgage, legal or tax advice. A proper pre-approval is the number to trust.

And keep my old rule of thumb: take the pre-approval and multiply by 0.85. On $561,400 that is about $477,000, which is the price where the monthly payment still leaves you a life.

If you want me to run your own numbers against what is listed right now, call me at 613-262-6545 or email fil@613realtor.ca. I would rather spend 20 minutes on your actual income than hand you another average.