Mortgage Affordability rule of thumb

1) Calculate the combined monthly before-tax income of you, your spouse or other occupants purchasing the home.

2) Divide by Three. This figure is the monthly payment you can afford to make on your house.

3) Take the total price of the house: and subtract the amount of money you expect to make as a down payment.  This is the money you will have to borrow.

4) Know your interest rate, know your amortization period of your choice Click here for mortgage calculator

5) Multiply this figure by the amount you need to borrow. Divide by 1000

6) Add to this your estimated monthly heating costs and monthly property taxes.

7) If this figure is equal to or less than one third of  your gross monthly income, (calculated in Step 2) you'll qualify for a mortgage on your dream home.

*Please be advised that this is a rough estimate. Any loans in which you may have in existence may qualify you for less.  Best policy is to speak to a mortgage broker or lending institution.

Compliments of New Home & Condo Guide Volume 14 Issue 14 page 76

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