To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation. Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines. In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries. What is a home inspection and should I have one done? What is the minimum down payment needed for a home? What is mortgage loan insurance? What is a conventional mortgage? How does bankruptcy affect qualification for a mortgage? How will child support affect mortgage qualification? Can I get a mortgage to purchase a home? Can I use gift funds as a down payment? What is a pre-approved mortgage? Should I wait for my mortgage to mature? What is a down payment? How can you acquire a home with as little as 5% down? How can you pay off your mortgage sooner? How can you use your RRSP to help you buy your first home? What are the costs associated with buying a home? What should the length of my mortgage term be? What are the monthly costs of owning a home? Should you go with a short or long-term mortgage? What is a fixed rate mortgage? What is a variable rate mortgage?

Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums, ranging from .50% to 3.75%, are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance. What is a conventional mortgage? How does bankruptcy affect qualification for a mortgage? How will child support affect mortgage qualification? Can I get a mortgage to purchase a home? Can I use gift funds as a down payment? What is a pre-approved mortgage? Should I wait for my mortgage to mature? What is a down payment? How can you acquire a home with as little as 5% down? How can you pay off your mortgage sooner? How can you use your RRSP to help you buy your first home? What are the costs associated with buying a home? What should the length of my mortgage term be? What are the monthly costs of owning a home? Should you go with a short or long-term mortgage? What is a fixed rate mortgage? What is a variable rate mortgage?

Very few home buyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage the first step in a potentially long-standing relationship. But even with a mortgage, you will need to raise the money for a down payment. The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting. The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings. How can you acquire a home with as little as 5% down? How can you pay off your mortgage sooner? How can you use your RRSP to help you buy your first home? What are the costs associated with buying a home? What should the length of my mortgage term be? What are the monthly costs of owning a home? Should you go with a short or long-term mortgage? What is a fixed rate mortgage? What is a variable rate mortgage?

Needless to say, you'll have financial responsibilities as a home owner. Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses. The Mortgage Payment For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization. Property Taxes Property tax can be paid in two ways - remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment. School Taxes In some municipalities, these taxes are integrated into the property taxes. In others, they are collected separately and are payable in a single lump sum, usually due at the end of the current school year. Utilities As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable. Maintenance and Upkeep You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighbourhood and, depending on the kind of renovations you make could add to the worth of your property. Should you go with a short or long-term mortgage? What is a fixed rate mortgage? What is a variable rate mortgage?