Here's how much money you'll need to make to buy a home in Toronto in 2025

The Toronto housing market is bracing for another intense year in 2025. With prices expected to rise and mortgage rates slowly easing, Torontonians eyeing homeownership might be wondering if it's time to make the leap.

According to a recent report from Royal LePage, the aggregate home price in the Greater Toronto Area is forecast to climb 5% year-over-year in 2025, reaching $1,225,770 by the end of the year.

That's more than 40% above the national average, which the real estate company predicts will hit $856,692 by the end of 2025.

For single-family detached houses, Toronto's median price is expected to hit $1,523,466 — a rise of a whopping 7% — while the median condo price could actually see a slight dip to $714,285.

The real estate company predicts that tighter supply and renewed buyer interest will push prices upward, especially for detached homes. "Buyers now believe home prices have hit bottom and are eager to act before competition intensifies," explains Royal LePage CEO Phil Soper.

This renewed activity, driven by a combination of falling interest rates and favourable lending rules, is expected to create even more demand.

Meanwhile, Toronto's cost of living — especially for those buying a home — remains one of the highest in Canada. So, just how much do you need to earn to turn the dream of owning property in Toronto into a reality? Let's break it down.

As a general rule, the Canada Mortgage and Housing Corporation (CMHC) recommends keeping your major housing costs — mortgage payments, property taxes, heating costs and condo fees — to no more than 32% of your before-tax income. We've made some calculations based on current mortgage conditions in Canada, including the Bank of Canada's current five-year conventional interest rate of 6.45%, to figure out what household income you need to afford an average home in Toronto.

Here's the financial breakdown for a single-family detached home priced at $1,523,466:

• A 20% down payment ($304,693.20) is the first hurdle. This is the minimum down payment allowed for a residential property over $1.5 million.
• That leaves you a mortgage of $1,218,772.80, which, at a 6.45% interest rate over 25 years, works out to $8,126.73 per month or $97,520.76 per year.
• Add annual property taxes (approximately $10,897.18 in the City of Toronto) and heating costs (around $2,662.68), and you've got about $111,080.62 in yearly housing costs.
• To manage this comfortably without surpassing 32% of your income, your household needs to make approximately $347,127 per year.

If you're eyeing a condo instead, here's what that looks like for the median price of $714,285:

• The down payment can be much smaller for a home at this price — the minimum is 5% on the first $500,000 and $10% on the rest, which comes to $46,428.50.
• Including the 4% CMHC insurance required for the smaller down payment, the total mortgage would be $694,570.76, which works out to $4,631.37 per month or $55,576.44 per year at the same rate and amortization period.
• We've estimated around $7,650 per year in condo fees (assuming 850 sq. ft. and around $0.75 per square foot per month). Condo fees can sometimes include heat but won't include property tax, which will add around $5,109.20 per year, bringing the total annual expenses to $68,335.64.
• This means you'll need a gross household income of about $213,549 per year.

So, unless you're earning six figures or have a hefty savings account, Toronto's housing market might remain out of reach for many in 2025.

But it's not all bad news. Falling interest rates and new mortgage policies could make things a bit more manageable this year. As of last month, first-time buyers and buyers of new builds can now qualify for 30-year amortizations on insured mortgages, and the insured mortgage cap is increasing to $1.5 million. These changes could help buyers access higher-priced homes with less money down and smaller monthly payments.

If you've been sitting on the sidelines waiting for the right moment, Royal LePage suggests that competition is heating up. With fewer new listings and more buyers entering the market, now might be the time to explore your options.