Young couple wants to build a US$700K home right out of college. The Ramsey Show cautions they’re moving quickly to becoming house poor

Joseph, a 21-year-old man, and his girlfriend want to build a US$700,000 home, despite both of them earning variable incomes and not having graduated from post-secondary education yet.

“We want to know if we’re way over our heads or if this is actually feasible,” Joseph asked The Ramsey Show cohosts Jade Warshaw and George Kamel (1).

Joseph said his girlfriend is an insurance agent earning commission, and he runs his own business. Together, they bring in about US$10,000 a month — but that income isn’t guaranteed. They’re planning on a down payment of up to US$130,000, plus a matching contribution from her parents, on a house that hasn’t even been built yet.

“Numbers aside, you’re in way over your heads,” Kamel said. “There’s not even a ring on the finger and you’re going to sign up for a mortgage and put your names on a deed together?”

Here’s why the hosts warn Joseph not to “leapfrog” into an higher-cost lifestyle before their finances are stable — and what young Canadians just starting out should consider before becoming house poor.

When aspiration doesn't meet financial readiness

Housing affordability in Canada varies widely by region, but a C$700K home already sits above the national average in many markets. According to the Canadian Real Estate Society (CREA), the national average home price in 2024 sat closer to the mid-C$600,000 range, with many smaller cities and mid-sized markets well below that level (2). That means a C$700,000 build would often fall into the upper end of a local market, rather than a starter home.

A widely used affordability guideline in Canada is to keep total housing costs below about 30% your gross household income. That figure typically includes the mortgage payment, property taxes, heating, insurance and basic utilities. The Canadian Mortgage and Housing Corporation (CMHC) uses this benchmark when helping buyers assess what they can realistically afford (3).

That guidance is especially important for households with variable or commission-based income. The Financial Consumer Agency of Canada cautions that irregular earnings can make it harder to manage fixed monthly payments during slower periods, increasing the risk of financial stress if income unexpectedly drops (4).

Even with a large down payment, the ongoing commitment matters. A mortgage on a C$700,000 home can translate into thousands of dollars a month before adding other homeownership costs like insurance and maintenance. Canada’s mortgage stress test also requires borrowers to qualify at a higher rate than they’ll actually pay, leaving less room for error if income fluctuates (5).

“I love to plan. I love goals.” Warchsaw told Joseph. “But you’re setting yourself up in a situation where everything must go as planned for this to work out,” And, even if everything goes exactly to plan, the couple could spend years feeling stretched — owning a nice home on paper, but lacking flexibility, savings and breathing room in real life.

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Grow into a lifestyle that matches your financial reality

If Joseph and his girlfriend were looking to mortgage a C$700,000 home in Canada, there is a chance they wouldn't even get approved.

Canadian lenders look closely at income stability, existing debt, credit history and the size of the down payment before approving a mortgage. Variable or commission-based income often makes that process tougher.

And even if they did qualify, a home that leaves you house poor can quietly squeeze every other area of your life. When most of your income goes toward housing, there’s less room for emergencies, savings or future plans — which can push people toward credit cards or loans just to stay afloat. Canadian consumer guidance from organizations like the CMHC consistently warn that relying on credit cards to cover everyday expenses is a sign housing may be stretching your budget too far (6).

Joseph also shared that he and his girlfriend hope to start a family in the next few years. That adds another layer of cost and uncertainty. Statistics Canada data shows that raising children significantly increases household expenses, especially around housing, childcare and transportation — costs that are harder to absorb when a budget is already tight (7).

“Why not get engaged, get married, rent together, save up on your own and then purchase a house or build when you’re financially ready?” Kamel suggested.

That slower approach would give the couple time to build a solid emergency fund, grow their income and get a clearer picture of what they can truly afford. Canadian financial planners often recommend having three to six months of expenses set aside before taking on a large, long-term commitment like a mortgage.

Rather than jumping straight into a high-end build, Kamel encouraged the couple to consider a more modest home or continue renting while they strengthen their finances. Starting smaller can mean a lower mortgage, more flexibility and the ability to pay off their debt faster — then upgrade later, once their income and savings are more stable.

“It’s okay for it to take a while,” he said. “That’s actually healthy.”

Bottom line

Building a home can be a meaningful goal — but timing matters. With variable income, unfinished schooling and big life changes ahead, moving too fast into an expensive home can leave young couples stretched and vulnerable.

A safer path is to slow down, stabilize income, build savings and let your lifestyle grow alongside your finances. Buy or build when your budget has breathing room, not when everything has to go perfectly just to make payments.

- with files from Melanie Huddart

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Ramsey Show (1); Canadian Real Estate Association (2); Canadian Mortgage and Housing Corporation (3); Financial Consumer Agency of Canada (4); Scotiabank (5); Fairstone (6); Statistics Canada (7)