What’s Your Home-Buying Comfort Level?

The GDS, What is it?

The monthly mortgage payment a buyer qualifies for is based on a percentage of their gross income. This percentage is called the Gross Debt Service ratio or GDS. On a credit score of 620, the typical GDS is 32% of income, provided other debts (i.e. credit cards, car loans, etc.) don’t interfere.

With a downpayment of 5%, if a lender, on reviewing your income, tells you that you can afford a monthly payment of $1,200, you would have to have a verifiable annual household income of around $45,000. The $1,200 would have to cover the monthly mortgage payment of principal and interest, plus 1/12 of the property taxes, plus the cost of heating. This is known as the PITH.

Median Price to Income Needed

Here are approximate gross incomes required for areas of Niagara that reflect affordable, median selling prices for an initial home purchase. The chart is based on a discounted, 5-year fixed rate mortgage of 2.84%, a 25-year amortization and a 5% minimum downpayment.

Detached Single Family


Mtg. P & I + Tax + Heat

Annual Income

Port Colborne




Fort Erie:








Niagara Falls:




St. Catharines:








From the chart, the PITH of *$1202.25 represents 32% of a gross income of *$45,084; it also represents 41.5% of the average take home of about $35,000 on this amount in Ontario. This can have an impact on a buyer’s budget and affordability. So the question becomes, “What monthly payment are you comfortable with?”
Finding the Proper Mix of the right home and mortgage payment for your comfort level can be tricky.

  • You might very well be comfortable with the maximum payment you qualify for,
  • You could consider some budgetary sacrifices to buy the nicer home that takes you to your affordability limit, or
  • You might decide to buy a lower priced home, lessening your payments.

Why is Buying the Right Choice?

Whatever you decide, buying is the right choice as it allows you to gain equity over time through appreciation and paying down the mortgage. It’s a type of forced savings with the advantage of enjoying living in the home at the same time.

Sources: MLS® Fusion for median price; ees-financial.com for average take home calculation.

Eugene Pilato

Eugene Pilato

Broker of Record
CENTURY 21 Today Realty Ltd., Brokerage*
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