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What you can afford |
"What you can afford" Worksheet You may also want to reference the mortgage calculators and tools from the major financial institutions listed in our tools section. The Royal Bank and Assiniboine Credit Union have very good "what you can afford" calculators. Step 1 Calculate Your Gross Debt Service Ratio (GDS). "Most lenders say that your monthy 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):
This is the maximum amount avaiable for your mortgage payment (principal and interest), proterty taxes, and 50% of condo fees (if applicable). Example: John and Sue have a gross family income of $66,000 per year, or $5,500 per month. Nomore than $1,650 ($5,500 x 30%) can be applied to housing expenses. Step 2 Calculate your Totoal Debt Service Ratio (TDS). "Your TDS takes into account monthly housing expenses plus other debts and loans you may have." To calculate your Total Debst Service Ratio (TDS):
Example: John and Sue have a greoss family income of $66,000 per year or $4,400 per month, a student loan of $150 per month an 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 ). |
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