A general rule of thumb is to multiply your gross annual income by 2.2 to arrive at the home’s approximate price level. For instance, if a married couple gross a total of $80,000 annually, they can probably afford a home priced at $176,000 (rew.ca).
The second affordability rule is that your entire monthly debt load shouldn’t be more than 40 per cent 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 monthly income. This figure is your Total Debt Service (TDS) ratio(rew.ca).
It helps to keep in mind that, in the long run, home owning has been traditionally a much better investment than renting. And when you finally sell, the capital gain on your Canadian private residence is tax free(rew.ca).
Posted by David Shieh- Abbotsford Real Estate Agent
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