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Lenders follow two simple affordability rules to determine how much you can pay.

The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income.

Housing costs include monthly mortgage principal and interest, taxes and heating expenses — known as P.I.T.H. for short.

For a condominium, P.I.T.H. also includes half of the monthly condominium fees. For leasehold tenure, P.I.T.H. includes the entire annual site lease.

Lenders add up these housing costs to determine what percentage they are of your gross monthly income. This figure is known as your Gross Debt Service (GDS) ratio. Remember, it must be 32% or less of your gross household monthly income.

The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income.

This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.

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Courtesy of Canada Mortgage and Housing Corporation | Suite 1000, 700 Montreal Rd. | Ottawa, ON | K1A 0P7 | 1-800-668-2642 | Fax: 1-800-245-9274

Trademarks owned or controlled by The Canadian Real Estate Association. Used under license.


Trademarks owned or controlled by The Canadian Real Estate Association. Used under license.

The information provided herein must only be used by consumers that have a bona fide interest in the purchase, sale or lease of real estate and may not be used for any commercial purpose or any other purpose.

Information is deemed reliable but is not guaranteed accurate by TREB.


RE/MAX Chay Realty Inc., Brokerage, Independently Owned and Operated
152 Bayfield St.
Barrie ON  L4M-3B5
(705) 722-7100