Buying a home you can afford
What is a Realistic Purchase Price I Should Look At?
Buying a home is likely the single largest investment for most of us, and we should take care to find the ideal home that fits our budget and is located in a neighbourhood that suits our lifestyle needs. What we think we can afford and what the bank thinks we can afford are often two different things. Everyone’s lifestyle may not be the same, but the banks and insurers have established some general affordability guidelines.
How Much Can I Qualify For?
Most lenders rely on two basic formulas as a simple and reliable method to determine the maximum mortgage they will approve you for. These are the Gross Debt Service (G.D.S.) and Total Debt Service (T.D.S.) Ratios.
The G.D.S. Ratio calculation factors using up to 35% of the total gross (before tax) income for the mortgage principal and interest, property taxes, estimated heating costs (sometimes all of these referred to as PITH), plus 50% of any maintenance fees.
The T.D.S. Ratio factors up to 42% of the total gross (before tax) income towards the mortgage, property taxes, estimated heating cost, and 50% of any maintenance fees PLUS any other debts and obligations. These debts and obligations could be car loans, lines of credit, credit cards with outstanding balances, personal loans, auto leases, furniture and appliance loans, etc.
You’re welcome to try out our Mortgage Qualifier Calculator below for general information as to how much house you can afford. Please remember that this calculator is for estimating purposes and should not be regarded as a guaranteed amount you’ll qualify for. The pre-approval process will deal with your exact amounts.
Let Us Calculate It For You:
A mortgage specialist at Homefund will be pleased to work out your specific qualification. Please remember that the above ratios are not the only thing considered in the approval process. I good credit rating, together with the amount of down payment and employment stability are important details. Since we work with many different lenders who offer lot of different products, and knowing their particular guidelines, we are your one-stop-shop for approval.
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