How much can I afford?
Breakdown the amount you need to buy
To determine how much you can afford, you will need to look at the following factors:
Review all your potential income sources. These can be limited to: salary, overtime, investment income, rental income.
Although the following expenses are not used to calculate your TDSR and GDSR you should take them into account when determining what you can afford for your mortgage payment as they are deducted from your net income.
Your donw payment will determine if your mortgage is considered conventional or high ratio.
Ac conventional mortgage requires a minimum downpayment of 20% of the purchase price or appraised value.
A high ratio mortgage is required if you have less than a 20% down payment on your purchase price. This mortgage must be insured through a default insurance provider like CMCH or SAGEN. Depending on the size of your down payment a default insurance is payable based on a percentage of your mortgage amount. This premium may be added to your mortgage and repaid with your required mortgage payments
The next ratio lenders will look at to determine your affordability is TDSR: Total Debt Service Ratio.
TDSR should equal no more than 42%-44% of your gross annual income. This will include your annual shelter costs plus payments for personal loans, credit cards, car payments, support payments, etc.
Although these limits are guidelines its important you look at your other expenses as well to determine what is truly affordable for you. Each members situation will be different and we are here to help guide you through the process.
The important ratio that lenders will review to determine your mortgage affordability is GDSR: Gross Debt Service Ratio