| |
How much you can afford depends on a number of
factors.
The most important factors are your gross household income, your down
payment and the mortgage interest rate. Lenders will consider two ratios when calculating how much you can afford. The first is called the
Gross Debt Service ratio (GDS). Your monthly housing costs–mortgage payment,
property taxes, heat, and one half of condo fees (if applicable)–should not
exceed 32% of your gross monthly income.
The second is called the Total Debt Service ratio
(TDS). Your total monthly debt load, which is made up of all of the expenses
used to calculate GDS plus any other debt obligations like credit card
payments or loan payments, cannot exceed 42% of your gross monthly income.
Once you have determined the maximum monthly payment
you can afford, you can use the mortgage calculator to experiment with some
numbers and see what your purchase price range will be.
|
Income,
home price and down payment guide |
|
Household
income |
5% down
payment |
Maximum
home price |
10% down
payment |
Maximum
home price
|
15% down
payment |
Maximum
home price |
20% down
payment |
Maximum
home price |
| $50,000 |
$11,000 |
$218,900 |
$23,100 |
$231,000 |
$36,700 |
$244,600 |
$52,000 |
$259,900 |
|
$60,000 |
$13,300 |
$265,400 |
$28,100 |
$280,200 |
$44,500 |
$296,600 |
$52,000 |
$315,200 |
|
$70,000 |
$15,600 |
$311,800 |
$33,000 |
$329,100 |
$52,300 |
$348,500 |
$74,100 |
$370,200 |
|
$80,000 |
$18,000 |
$358,500 |
$37,900 |
$378,400 |
$60,100 |
$400,700 |
$85,200 |
$425,700 |
|
$90,000 |
$20,300 |
$405,100 |
$42,800 |
$427,600 |
$68,000 |
$452,700 |
$96,200 |
$481,000 |
|
$100,000 |
$22,600 |
$451,600 |
$47,700 |
$476,700 |
$75,800 |
$504,800 |
$107,300 |
$536,300 |
|
$110,000 |
$24,900 |
$498,000 |
$52,600 |
$525,700 |
$83,500 |
$556,600 |
$118,300 |
$591,400 |
|
| Figures are
rounded to the nearest $100 |
The above table provides estimates of the maximum home price you can afford, based on your household income. These estimates are based on a mortgage rate of 6%, over a 35 year amortization, average property tax rates and heating costs, and a debt service ratio of 32%. The amount of other monthly payments may affect the home purchase amount you qualify for. These examples assume no condo fees. To qualify for mortgage financing, you must meet lender requirements.
By choosing bi-weekly accelerated payments instead of monthly payments, you can reduce your amortization from 35 years to under 28 years, saving thousands of dollars in interest.
|
