Canada housing affordability in 2027: cities, incomes, and what changed
Canada's housing affordability crisis deepened through 2026 — but rate cuts and policy shifts are changing the math. This analysis covers affordability by city, the income you need to qualify today, and what CMHC, OSFI, and the Bank of Canada are doing about it.
Canada's housing affordability crisis is the product of a decade of supply shortfalls colliding with a pandemic-era price surge and a rate-hiking cycle that temporarily cooled demand without fixing supply. As the Bank of Canada began cutting rates in 2024, affordability improved modestly — but not enough to offset the structural gap between incomes and home prices in Canada's largest cities.
Affordability by city: what the numbers show
The standard measure for Canadian affordability is the share of median household after-tax income required to cover mortgage payments, property taxes, and utilities on a benchmark-priced home. RateHub's quarterly affordability tracker publishes this metric city by city. Here is the mid-2026 snapshot:
| City | Benchmark price | Income needed | Affordability share | YoY change |
|---|---|---|---|---|
| Vancouver | $1,295,000 | $215,000 | 85% | +2% |
| Toronto | $1,070,000 | $178,000 | 66% | −3% |
| Victoria | $875,000 | $148,000 | 58% | −2% |
| Hamilton | $810,000 | $138,000 | 56% | −4% |
| Ottawa | $640,000 | $108,000 | 44% | −1% |
| Calgary | $590,000 | $97,000 | 40% | +5% |
| Edmonton | $415,000 | $69,000 | 29% | +3% |
| Montreal | $555,000 | $93,000 | 39% | −2% |
| Halifax | $490,000 | $82,000 | 36% | −1% |
| Winnipeg | $355,000 | $60,000 | 25% | 0% |
Income needed = minimum household income to qualify under the stress test (5% down on <$500k portion, 10% on remainder; contract rate 5.5%, qualifying at 7.5%). Source: RateHub, CREA benchmark prices.
Why Calgary and Edmonton moved in the opposite direction
While most major markets saw modest affordability improvement from rate cuts, Alberta's two largest cities became less affordable through 2025–2026. The reason is interprovincial migration: Alberta attracted record net inflows as buyers priced out of Toronto and Vancouver moved east, driving Calgary benchmark prices up 18% in 2025 even as rates fell. Edmonton, historically Canada's most affordable major city, followed a similar but smaller trajectory. CREA's national and city-level statistics show this divergence clearly in the quarterly benchmark price series.
The stress test and qualifying income
Canada's mortgage stress test — defined in OSFI Guideline B-20 — requires lenders to qualify borrowers at the higher of their contract rate + 2%, or 5.25%. At a 5.5% contract rate, that means qualifying at 7.5%. Here is what that requires by purchase price:
Use the Canadian mortgage calculator to model exact payments at your purchase price, down payment, and rate — including the CMHC premium added to your loan balance.
Policy responses: what governments have announced
- Federal Housing Accelerator Fund: $4 billion to municipalities that upzone and fast-track approvals, targeting 100,000 new permits by 2026.
- FHSA (First Home Savings Account): Up to $8,000/year tax-deductible, $40,000 lifetime, tax-free for a qualifying home purchase.
- CMHC 30-year amortization: First-time buyers and new-build purchases can now access 30-year amortizations with insured mortgages, lowering monthly payments by ~10%.
- BC missing-middle zoning: Allows up to 6 units on most single-family lots provincewide — estimated to unlock 130,000 additional units over a decade.
- Stress test renewal exemption: OSFI confirmed that borrowers renewing with the same lender no longer face the stress test — reducing payment shock for the 1.2 million mortgages up for renewal in 2025–2026.
External references
- Bank of Canada — Canadian mortgage rate averages
- CMHC — Housing Supply Report
- OSFI — Guideline B-20 (stress test)
- CREA — National and city housing market statistics
- RateHub — Canadian housing affordability by city
- CRA — First Home Savings Account (FHSA)
Common questions
Which Canadian city has the worst housing affordability?
Vancouver and Toronto consistently rank as the least affordable major markets in Canada — and among the least affordable in the world. By mid-2026, the share of after-tax income required to own a benchmark-priced home in Vancouver exceeded 85%, and Toronto was above 65%. RateHub's quarterly affordability report tracks the income required to buy in each city and shows how both markets have diverged from the national average over the past decade.
How do Bank of Canada rate cuts affect affordability?
Each 25 basis-point cut from the Bank of Canada lowers variable-rate mortgage payments immediately and can reduce 5-year fixed rates indirectly through bond market expectations. On a $600,000 mortgage, a 1% rate reduction saves roughly $325/month. The Bank of Canada's published mortgage rate averages show the trajectory of qualifying rates as they moved from their 2023 peak through the 2024–2026 easing cycle.
What is the income needed to buy a home in Canada today?
Under Canada's stress test, lenders qualify you at your contract rate + 2% or 5.25%, whichever is higher. On a $700,000 purchase with 10% down at a 5.5% contract rate (qualifying at 7.5%), you need roughly $120,000 household income to pass TDS at 44%. CMHC's affordability calculator lets you check exact income requirements by price and province, including the CMHC insurance premium effect on the loan.
Has the FHSA (First Home Savings Account) improved affordability?
The FHSA allows first-time buyers to contribute up to $8,000/year (lifetime limit $40,000), with contributions tax-deductible and withdrawals for a qualifying home tax-free. At a 43% marginal rate, the tax benefit on a full contribution is $3,440/year — meaningful, but far smaller than the gap between incomes and prices in Toronto and Vancouver. The CRA's official FHSA page outlines contribution limits, eligible withdrawals, and rules for combining the FHSA with the Home Buyers' Plan.
What is Canada doing to increase housing supply?
Federal and provincial governments have launched several supply-side measures: the federal government's Housing Accelerator Fund targets 100,000 new homes by incentivizing municipalities to upzone; Ontario's Bill 23 aims to streamline approvals; BC introduced a provincewide rezoning that allows up to 6 units on most single-family lots. CMHC's Housing Supply Report tracks starts, completions, and the gap between supply needed and supply built.
How does the stress test affect affordability for renewal borrowers?
As of late 2024, OSFI confirmed that borrowers renewing at the same lender no longer face the stress test — removing a major obstacle for existing homeowners. New purchases and switches to a new lender still require the full stress test qualification. This change allows existing borrowers to renew at competitive rates without re-qualifying at the higher stress-test rate. The original rule is detailed in OSFI Guideline B-20.
Ready to see your numbers? Open the Canadian mortgage calculator or check how much house you can afford.