Affordability Rules

Affordability Rules

Affordability Rule #1

Your monthly housing costs shouldn't be more than 32% of your gross monthly income. Housing costs include your monthly mortgage payments (principal and interest), property taxes and heating expenses. This is known as PITH for short — Principal, Interest, Taxes and Heating.

Affordability Rule #2 

Your total monthly debt load (debt payments)should not be more than 40% of your gross monthly income. Your entire monthly debt load includes your housing costs (Principal, Interest, Taxes, Heating) plus all your other debt payments (car loans or leases, credit card payments, lines of credit payments, etc).  You can calculate your total monthly debt payments using the form found on this CMHC site. This figure is called your Total Debt Service (TDS) ratio.

Mortgage Insurance 

Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment. Find out how much CMHC mortgage loan insurance costs here.


Mortgage Payments

Actual mortgage payments must come from your mortgage holder.  Get an estimate of mortgage payments with this mortgage calculator.  
View some of the current mortgage rates here. For more information on mortgage advisors and brokers contact me.