Buying a home is one of the most important financial transactions for a middle class household. This is not something to be taken lightly. Honoring a mortgage should not be a burden, but should contribute to the harmony of the couple and the family. There is no question of launching blindly and then bitterly regret the consequences. How to calculate the amount of mortgage you can afford? Let us know below!
The accessibility rule, as stated by Canada Mortgage and Housing Corporation (CMHC), is that your monthly housing costs (mortgage principal and interest, taxes and heating costs) must not exceed 33% of the household’s gross monthly income.
CMHC’s second accessibility rule indicates that your total monthly debt load, including housing costs, must not exceed 40% of your gross monthly income.
Let’s say that in the best case you have no debt. In this case, which is obviously ideal, you simply take your gross monthly income and multiply it by 33% to know the maximum you can afford to pay on your mortgage payment, your property taxes, heating costs,as well as half of your condo fees.
For example, if you have a family income of $ 6,000 a month, you take that amount and multiply it by 33%, you realize that you have $ 1,980 to spend on your total expenses Housing. If you estimate property taxes at $ 200 per month, heating costs at $ 150 and half the condo fees at $ 100, you conclude that the total amount of your mortgage payments will not exceed:
($ 1,980 – [200 +150 +100]) = $ 1,530
So in theory, with an income of $ 6,000 gross per month and without any debt, a household is able to pay $ 1,530 on a mortgage.
If you are simply not there, you can always visit the ratetrade financial mortgage affordability calculator. Here, you just need to put your details like income, monthly expenses, payment of debt details and you will produced with the result on how much mortgage you can afford on your salary calculator.