How Much Do I Qualify For?

When buying a home, it is helpful to determine the type of home you’d like and how much you can afford before beginning your search. Monthly housing costs should not be more than 32% of your gross monthly income. Housing costs include your monthly mortgage payments (principal and interest), property taxes and heating expenses (PITH— Principal, Interest, Taxes and Heating). To get an idea of how much you can afford to pay each month for a home, multiply your gross monthly income by 32%.

Other Determining Factors

When coupled with current outstanding loans, the total of your debt service should not exceed 40% of your gross monthly income. Some lenders may have slightly more liberal requirements or loan interest rates which may increase your purchasing power.

Mortgage interest, property taxes, loan fees or “points” are currently tax deductible (up to allowable limits). Points are generally deductible in the year paid. A point equals 1% of the mortgage amount. If you are in the 32% tax bracket, this is equivalent to receiving a 32% discount on your mortgage interest and property taxes. During the first few years of your mortgage, your tax savings are especially high because most of your monthly payment goes toward loan interest.

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Tish Faith, Sales Representative

Right at Home Realty Inc.,
5111 New Street, Suite 104
Burlington, ON L7L1V2

Office Phone: 905.637.1700
Mobile: 905.691.4733
Email: tish@tishfaith.com

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