What is your Total Income (line 150 on your tax return or notice of assessment),
GDSR: For a principal residence, up to 32% of your Total Income can be used toward mortgage payments, property taxes and heating costs (if applicable, one half of the monthly condominium common/maintenance fees are also included into this calculation).
TDSR: 40% of your Total Income minus all of your debt payments or obligations (other than current mortgage payments, property taxes and heating costs), including car loans, credit cards, lines of credit, etc.
The lesser of the first or second calculation will tell you how much of a housing related payment you can afford, including your mortgage payment.
These calculations are fairly standard amongst Lenders, although different lenders will have different rules as to what they may include or remove from these calculations. There are various non-conventional lenders in the market that will qualify clients at higher ratios that these. These types of mortgages will typically have higher rates of interest applicable.
Don’t become house poor! Be sure that you are comfortable with how much you commit to paying a mortgage, property taxes and heating costs. If these costs equal 32% of your income, you will qualify as long as TDSR does not breach 40%.
For a detailed calculation Contact Us at Mortgage Logic.