Are you in the market to buy a house? If the answer is “yes”, the very first question you need to ask yourself is, “how much house can I afford?” This one question is the starting point for all your following questions. Where do I want to live turns into where can I afford to live? What renovations do I want to make turns into what renovations can I afford to make? 
 
Buying a house is an expensive purchase. You need to be financially able to pay your mortgage, your closing fees, purchase furniture and have money saved in case of an emergency. Before you start your home buying search, start a budget by answering these three questions. 
 
#1 How Much Do You Make?
 
Your household income will heavily dictate how much house you can afford. Think about how much you make in a year, how much you ideally like to save for retirement or trips, and what monthly expenses you will be carrying over when you move. These expenses might include your phone bills, gym memberships, groceries, or subscriptions. 
 
#2 How Much Are Your Monthly Debts?
 
On top of your regular expenses, is there anything substantial you are carrying with you month to month? Things like car payments, student loans, or credit card payments will add up. On top of these expenses, you are now adding home insurance, utility and mortgage payments. 
 
#3 How Much Savings Do You Have?
 
If buying a house has been one of your goals, you have probably set aside a good chunk of money towards a down payment. Using an online mortgage calculator, you will get a more accurate view of how much home you can buy using that down payment. Now, remember some saved money should go towards closing costs and emergency expenses. 
 
Another helpful tip is using the 28%/36% rule. The rule is you should not spend more than 28% of your gross monthly income on household costs and 36% of your income on total debts like your mortgage, credit cards and car loans. I hope these tips help you start thinking about how much home you can afford and budgeting. If you have any more questions, please let me know.

At Knowledge Broker, our goal is to create an open-source of information for all our clients. At the end of the day, they get exactly what they want and what they need. If you know someone who could use our help or services please put them in touch with us or send us their details using the contact information below.
  

JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
joshua@knowledgebroker.ca
249 Avenue Road • Newmarket, ON L3Y 1N8
289.210.6007