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How do I plan my finances before I buy?

What Can You Afford?

Buying a home is a big deal; it’s probably the largest purchase you’ll ever make. Being prepared means also understanding that expenses go beyond purchase price.

To secure your new home, you’ll likely need to arrange for a mortgage but before you do, take a look at how much you can afford each month. Based on your income and expenses, our affordability calculator can help you estimate your maximum affordable mortgage payments.

Gross Debt Service Ratio (GDSR)

This lending principle simply states that your monthly housing costs should not exceed 32% of your gross (before taxes) monthly family income.

Total Debt Service Ratio (TDSR)

This lending principle summarizes that your monthly housing cost and payments on all other debts (like loans, credit cards and lease payments) should not exceed 40% of your gross monthly income.

Once you have used the affordability calculator to estimate your maximum monthly total, you can compare this number to the mortgage payments for specific loan amounts. Enter the loan amount in our mortgage calculator and the monthly principal and interest will be calculated for you.

Blog content from Realtor.ca

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