Guide to BUYING a Home

"What You Can Afford" Worksheet

Step 1: Calculate Your Gross Debt Service Ratio (GDS).

"Most lenders say that your monthly housing expenses (principal, Interest, and taxes) should not exceed 30% 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 (30%). x .30 $ ____________________
This is the maximum amount available for your
mortgage payment (principal and interest),
property taxes, and 50% of condo fees (if applicable).

$ ____________________

Example: John and Nancy have a gross family income of $ 66,000. per year, or $ 5,500. per month. No more than $ 1,650. ( $ 5,500. x 30% ) can be applied to housing expenses.

Step 2 : Calculate Your Total Debt Service Ratio (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 (before tax) income. $ ____________________
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: John and Nancy have a gross family income of $ 66,00. per year or $ 5,500. per month. They also have two car payments totalling $ 575. per month, a student loan of $ 150. per month, and credit card payments of $ 175. per month.