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Please select a Question, your answer will be displayed below
How much can I afford to pay for a home?
How can I find out if I am eligible for High Sped Internet?
What is a home inspection and should I have one done?
What is the minimum down payment needed for a home?
What is mortgage loan insurance?
What is a conventional mortgage?
How does bankruptcy affect qualification for a mortgage?
How will child support affect mortgage qualification?
Can I get a mortgage to purchase a home?
Can I use gift funds as a down payment?
What is a pre-approved mortgage?
Should I wait for my mortgage to mature?
What is a down payment?
How can you acquire a home with as little as 5% down?
How can you pay off your mortgage sooner?
How can you use your RRSP to help you buy your first home?
What are the costs associated with buying a home?
What should the length of my mortgage term be?
What are the monthly costs of owning a home?
Should you go with a short or long-term mortgage?
What is a fixed rate mortgage?
What is a variable rate mortgage?
How much of a mortgage can I afford?
How much do I need for a down payment?
What are closing costs?
Do You Sell Our Information to Anyone Else?
What is the difference between Term and Amortization?
How can I save money on my mortgage?
What's the diff. from Pre-qual, Pre-approv and Full Loan approv?
What are the benefits of a Mortgage Agent?
What is a mortgage agent?
What is title insurance?
What is a home inspection?
Who is an appraiser?
How much does the CMHC insurance cost?
What is a Variable Interest Rate Mortgage (Open)?
Can I use my RRSP for Down Payment?
Question -
How much can I afford to pay for a home?
Answer -
To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.
Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines.
In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries.