Worksheets


What You Can Afford

Step 1
Calculate Your Gross Debt Service Ratio (GDS).

"Most lenders say that your monthly housing expenses (principal, Interest, and taxes) should not exceed 30% of your family income (before personal income taxes)."

To calculate your Gross Debt Service Ratio (GDS):

Take your total monthly gross (before tax) income. $ ____________________
Multiply it by the maximum GDS Ratio (30%). x .30 $ ____________________
This is the maximum amount available for your mortgage payment (principal and interest), property taxes, and 50% of condo fees (if applicable). $ ____________________


Example: Will and Grace have a gross family income of $66,000. per year, or $5,500. per month. No more than $1,650. ( $ 5,500. x 30% ) can be applied to housing expenses.
Step 2
Calculate Your Total Debt Service Ratio (TDS):

"Your TDS takes into account monthly housing expenses plus other debts and loans you may have."

To calculate your Total Debt Service Ratio (TDS):

Take your monthly gross (before tax) income. $ ____________________
Multiply it by the maximum TDS Ratio (40%). x .40 $ ____________________
Subtract your regular monthly expenses (e.g. credit cards, car payments, personal loans). $ ____________________
This is the maximum amount available for your mortgage payment, property taxes, and 50% of condo fees (if applicable). $ ____________________


Example: Will and Grace have a gross family income of $66,000. per year or $5,500. per month. They also have two car payments totalling $575. per month, a student loan of $150. per month, and credit card payments of $175. per month. They can apply no more than $1,300. of their monthly income to housing costs ($5,500. x 40% = $2,200. - $900. = $1,300.).
Step 3
Calculate the amount available to apply to your monthly mortgage payment. "This figure will be used to calculate how much mortgage you are eligible for."

To calculate this amount:

Identify the lower of your GDS or TDS: $ ____________________
Subtract an approximate amount for property tax. $ ____________________
This is the amount we will now use to calculate how much mortgage you are eligible for. $ ____________________
Step 4
Determine The Purchase Price You Can Afford.

  • Using the figure calculated in Step 3, find the closest matching number in column A (see below).
  • The corresponding number in column B (see below) is your approximate eligible mortgage amount.
  • In column C (see below) record the down payment amount that you have available.
  • In column D (see below) add the numbers identified in column B + C together.

    This approximately equals the price of the home that you can afford. In the example of Will and Grace, the amount calculated in Step 3 was $ 1,125. They also have saved a down payment of $ 30,000. With a monthly payment of $ 1,125. (refer to column A) they are eligible for an approximate mortgage of $ 130000. (refer to column B). With their down payment of $ 30,000., they can afford to buy a home worth approximately $ 160,000.
A
MONTHLY PAYMENTS
B
ELIGIBLE AMOUNT OF MORTGAGE
cost includes principal and interest per month based on interest rate of 6.50% and 25-year amortization)
$ 202 $ 30,000.
$ 270 $ 40,000.
$ 338 $ 50,000.
$ 406 $ 60,000.
$ 474 $ 70,000.
$ 572 $ 80,000.
$ 610 $ 90,000.
$ 610 $ 90,000.
$ 678 $ 100,000.
$ 746 $ 110,000.
$ 814 $ 120,000.
$ 882 $ 130,000.
$ 950 $ 140,000.
$ 1,018 $ 150,000.
$ 1,086 $ 160,000.
$ 1,154 $ 170,000.
$ 1,222 $ 180,000.
$ 1,290 $ 190,000.
$ 1,358 $ 200,000.
C
DOWN PAYMENT AVAILABLE
+
D
HOUSE PRICE YOU CAN AFFORD
=


Don't forget that the down payment must be at least 10% of the purchase price of the home, unless you qualify for Canadian Mortgage and Housing Corporation's (CMHC) 5% down program for first-time buyers.

Please note that all amounts are approximate. Columns A & B are based on an interest rate of 6.5%. Rates do vary. If rates are higher, you would be eligible for a smaller mortgage. If rates are lower, your mortgage could be higher.

These calculations do not take into account mortgage insurance premiums for high-ratio mortgages.

Home Purchase Cost Estimate
Use the form below to help you calculate the potential costs associated with buying a home. Mario will help you calculate the costs associated with your particular purchase.
Fixed costs
Purchase Price $__________
GST (if applicable) $__________
Legal fees and disbursement $__________
Lawyer's fees $__________
Land transfer tax (if applicable) $__________
Appraisal fee $__________
Status certificate fee (if condo) $__________
Home inspection fee $__________
CMHC fee $__________
Mortgage loan insurance premium* $__________
Sub total $__________
*could be incorporated into your mortgage  
Monthly costs after purchase
Mortgage Payment $__________
Condominium fee $__________
Property taxes (adjustments to) $__________
Sub total $__________
Other potential costs
Furniture, appliances, etc... $__________
Moving expenses $__________
Renovations/repairs $__________
Sub total $__________
   
Total estimated cost $__________

 

 
 
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