When buying a home, it is helpful to determine the type of home you’ll like and how much you can afford before beginning your search. Most lenders allocate approximately 28% of your GROSS MONTHLY INCOME to housing expense. Housing expense includes principal, interest, taxes and insurance (PITI). To get an idea of how much you can afford to pay each month for a home, multiply your gross monthly income by 28%.
When coupled with current outstanding loans, the total for your debt service should not exceed 36% of your gross monthly income. Some lenders may have slightly more liberal requirements or loan interest rates which may increase your purchasing power.
Take the test Are You Financially Ready?
The trade marks displayed on this site, including CREA®, MLS®, Multiple Listing Service®, and the associated logos and design marks are owned by the Canadian Real Estate Association. REALTOR® is a trade mark of REALTOR® Canada Inc., a corporation owned by Canadian Real Estate Association and the National Association of REALTORS®. Other trade marks may be owned by real estate boards and other third parties. Nothing contained on this site gives any user the right or license to use any trade mark displayed on this site without the express permission of the owner.