How much Home can you afford?
How much Home can you afford?
| Cost of buying a home | = | One Time Costs
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+ |
Monthly Costs
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Yes, you need a mortgage. So the first step in determining how much a bank will lend you is to understand how much you can afford each month. This is determined using two lending principals.
1. Gross Debt Service Ratio (GDSR) calculation:
This lending principle simply states that your monthly housing cost should not exceed 32% of your gross monthly family income.
2. Total Debt Service Ratio (TDSR) calculation:
This lending principle summarizes that your monthly housing cost and payments on all of your other debts (including loans, credit card and lease payments) should not exceed 40% of your gross monthly income.
Everybody is total costs are different, but hopefully you have enough money for a nice down payment.
Source: howrealtorshelp.ca
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