# How Much Can You Afford Mortgage

Generally speaking, most prospective homeowners can afford to finance a property that costs between 2 and 2.5 times their gross income. Under this formula, a person earning 0,000 per year can afford a mortgage of \$200,000 to \$250,000. But this calculation is only a general guideline.

For example, let’s say your maximum monthly payment is \$1,250, you have \$25,000 for a down payment, and taxes and insurance will cost about \$200 a month. That means you could afford a \$172,000 house on a 15-year fixed-rate mortgage at 3.5% interest.

If you are a first-time home buyer, you can borrow up to \$25,000 from your RSP towards your down payment. 1 First time home buyers can withdraw up to \$25,000, in a calendar year, from their RSPs for a home purchase (up to \$50,000 for a couple). They then have 15 years to repay their RSP (other conditions apply).

When you’re ready to buy a home, the first step is figuring out how much house you can afford. Homes are expensive – for many people, it’s their most valuable asset – and a home loan is often the only way for someone to buy one. You can get a mortgage from a bank, a credit union, or another type of lender.

Mortgage Type: The type of mortgage you choose can have a dramatic impact on the amount of house you can afford, especially if you have limited savings. FHA loans generally require lower down payments (as low as 3.5% of the home value), while other loan types can require up to 20% of the home value as a minimum down payment.

Buying a house involves one of the toughest equations you'll ever solve – how much can you truly afford? We'll help you do the math.

See how much you can afford to spend on your next home with our Affordability Calculator. Calculate your affordability to see what homes fit into your budget.. mortgage rates by Loan Type. 30-year fixed rates |. If you wish to report an issue or seek an accommodation, please contact us.

Methodology. That home payment assumes a 30-year mortgage at current rates, and includes 1% property tax and 0.4% for homeowners insurance. It does not factor in private mortgage insurance, which you’ll owe if your down payment is less than 20% of the purchase price. You should reduce the maximum target if you have other savings needs.