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Many UrbanToronto articles mention \u201caffordable housing,\u201d but the term can mean very different things depending on whether you\u2019re looking at a federal program, a provincial policy, or a municipal agency. Official definitions vary across levels of government and shape how projects are financed, approved, or managed.<\/p>\n
At the national level, Canada uses a basic benchmark: housing is affordable when shelter costs (rent or mortgage, plus utilities, taxes, and fees) do not exceed\u00a030% of gross household income<\/a>. The rule of thumb is widely applied by the Canada Mortgage and Housing Corporation (CMHC) and\u00a0Statistics Canada<\/a>, though it does not capture the realities of Toronto\u2019s high market costs.<\/p>\n A second measure ties affordability to market prices. CMHC publishes\u00a0Average Market Rent (AMR)<\/a> by unit type, and many programs cap affordable housing at or below those levels, such as 80% of AMR. Because AMR shifts with the market, this approach reflects current rents but may quickly move out of reach when prices rise faster than incomes.<\/p>\n Ontario blends these two lenses. The\u00a0Provincial Planning Statement<\/a> defines affordability as the lower of a 30%-of-income test for low- to moderate-income households or average regional rents and prices. The\u00a0Development Charges Act, 1997<\/em><\/a>, which governs exemptions from municipal fees, uses households at the 60th income percentile as the benchmark. Rental affordability is the lower of a 30%-of-income figure or local AMR; ownership is the lower of a 30%-of-income figure or 90% of the average purchase price.<\/p>\n In the municipal realm, Toronto applies its own,\u00a0more detailed thresholds<\/a>. For affordable rental, the City compares CMHC\u2019s AMR with 30% of before-tax income at the 50th percentile for studios and the 60th percentile for one-, two-, and three-bedroom units, applying the lower number. It also defines \u201cmid-range\u201d categories up to 100% and 150% of AMR.\u00a0<\/p>\n The City of Toronto\u2019s\u00a0Housing Now TO program<\/a> adds another approach by redeveloping municipally owned land, requiring that a significant portion of new homes meet affordability rules alongside market units. While slower to advance than initially planned, it is designed to deliver thousands of rentals across multiple sites.<\/p>\n For affordable ownership, the City caps purchase prices so that monthly costs equal 30% of before-tax income at unit-specific percentiles. In 2025, this produces price limits of about $186,000 for a studio, $226,000 for a one-bedroom, $282,000 for a two-bedroom, and $327,000 for a three-bedroom, well below typical Toronto sale prices.<\/p>\n Inclusionary zoning requires that a share of units in new developments meet the City\u2019s affordability thresholds, often secured for 99 years in PMTSAs (Protected Major Transit Station Areas). Non-profit providers and co-operatives frequently use rent-geared-to-income (RGI) models, pegged at 30% of actual household income, which achieve further affordability. For example, a mid-2025 proposal at\u00a09 Shortt Street<\/a> just a block from the soon-to-open Fairbank station on Line 5 Eglinton, and therefore within that station’s PMTSA, is part of the Toronto Builds program. Of its 458 rental units, about 140 would be designated as affordable, directly applying the City\u2019s threshold framework.<\/p>\n Debate continues around feasibility. Income-based thresholds reflect what households can realistically pay but often fall short of covering construction costs. Market-based thresholds move with rents but can escalate faster than wages. Governments try to bridge the gap through subsidies and funding agreements, yet demand continues to exceed supply, as shown by housing lotteries that draw thousands of applicants for a handful of affordable homes.<\/p>\n For readers parsing development proposals, context matters. One application might reference \u201caffordable rental\u201d tied to AMR, another may rely on\u00a0Development Charges Act formulas, while an ownership program could publish fixed City price caps. Understanding which definition applies is the key to knowing how many units qualify, at what rent or price, and for how long the affordability is guaranteed.<\/p>\n * * *<\/p>\n From 2015 to 2017, UrbanToronto and its sister site, SkyriseCities, ran an occasional series of articles under the heading\u00a0Explainer<\/strong>. The series was revisited, expanded, and articles were updated where necessary in 2023. Now, additions to the series will occur on occasion, like this article. Each Explainer<\/strong> takes a concept from Urban Planning, Architecture, Construction, or related topics covered on our sites, and presents a detailed look at it. While you may already know what some of the concepts covered by the Explainer<\/strong> articles mean, others may be new to you. To read other\u00a0Explainer<\/strong> features, click on the magenta\u00a0Explainer<\/strong>\u00a0box at the top of the page. If you have other planning terms that you would like to see detailed in an\u00a0Explainer<\/strong> article, or thoughts about this one, please share them via the comment field below!<\/em><\/p>\n * * *<\/p>\n UrbanToronto’s research and data service,\u00a0<\/em>UTPro<\/em><\/a>, provides comprehensive data on construction projects in the Greater Golden Horseshoe\u2014from proposal through to completion. Other services include\u00a0<\/em>Instant\u00a0Reports<\/em><\/a>, downloadable snapshots based on location, and a daily subscription newsletter,\u00a0<\/em>New Development Insider<\/em><\/a>, that tracks projects from initial application.\u200b<\/em><\/p>\n \u00a0<\/p>\n <\/imgx><\/imgx><\/imgx><\/div>\n