Before you start looking for your dream home, let’s find out how big you can dream. Knowing your true budget is the first and most important step in buying a home.
A home is a big purchase
It’s probably the most expensive thing you’ll ever buy, and there are lots of expenses you might not even know about. Some of them include:
|Cost of buying a home =||
One Time Costs
+ Monthly Costs
Everybody’s total costs are different, but it’s almost guaranteed you won’t have that much money saved up. Hopefully, you have enough for a nice down payment, but for the rest…
Yes, you need a mortgage. So determine how much a bank will lend you
Head over to the next step where you’ll find helpful tips on arranging your mortgage. But the first step in determining how much a bank will lend you is to understand how much you can afford each month. This is determined using two lending principals.
Gross Debt Service Ratio (GDSR) calculation:
This lending principle simply states that your monthly housing cost should not exceed 32% of your gross monthly family income.