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What You Can Afford Worksheet
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Step 1
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Calculate Your Gross Debt Service Ratio (GDS).
"Most lenders say that your monthly housing expenses (principal, interest, and taxes) should not exceed 32% of your family income (before personal income taxes)."
To calculate your Gross Debt Service Ratio (GDS):
| Take your total monthly gross (before tax) income. |
$ ____________________ |
| Multiply it by the maximum GDS Ratio (32%). x .32 |
$ ____________________ |
| This is the maximum amount available for your mortgage payment (principal and interest), property taxes, and 50% of condo fees (if applicable). |
$ ____________________ |
Example: If the gross family income is $ 66,000. per year, or $ 5,500. per month, no more than $ 1,760. ( $ 5,500. x 32% ) can be applied to housing expenses.
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Step 2
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Calculate Your Total Debt Service Ration (TDS):
"Your TDS takes into account monthly housing expenses plus other debts and loans you may have."
To calculate your Total Debt Service Ratio (TDS):
| Take your monthly gross income before taxes. |
$ ____________________ |
| Multiply it by the maximum TDS Ratio (40%). x .40 |
$ ____________________ |
Subtract your regular monthly expenses
(e.g. credit cards, car payments, personal loans). |
$ ____________________ |
This is the maximum amount available for your mortgage payment, property taxes,
and 50% of condo fees (if applicable). |
$ ____________________ |
Example: If the gross family income is $ 66,000. per year or $ 5,500. per month with two car payments totalling $ 575. per month, a student loan of $ 150. per month, and credit card payments of $ 175. per month, no more than $ 1,300. of the monthly income can be applied to housing costs ($ 5,500. x 40% = $ 2,200. - $ 900. = $ 1,300.).
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Step 3
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Calculate the amount available to apply to your monthly mortgage payment. This figure will be used to calculate how large a mortgage you are eligible for.
To calculate this amount:
| Identify the lower of your GDS or TDS: |
$ ____________________ |
| Subtract an approximate monthly amount for property tax. |
$ ____________________ |
| This is the amount used to calculate how large a mortgage you are eligible for. |
$ ____________________ |
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