How much house will $5000 CDN per month and $8000 per month get?

How much house will $5000 CDN per month and $8000 per month get?

Postby cetanwakuwa57 » Tue Apr 26, 2011 10:19 am

Hello. How much house can I afford if I have $5000 per month, which is roughly 20% of my monthly income, for a mortgage? Same question for $8000 figure. Location: western Canada. I know there are several factors that can come in to play but I just would like to know a ballpark figure. Thanks very much for any input.
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How much house will $5000 CDN per month and $8000 per month get?

Postby neall1 » Tue Apr 26, 2011 10:20 am

You are right, there are many factors which go into the decision by a bank to give you a mortgage. However, at this time most banks allow you to use 25-32% of your gross income for the maximum monthly mortgage payment.

Since $5,000/mo. represents 20% of a $25,000 monthly gross income, both of your figures appear to be possible. There should be no problem to get a loan with a 20-25% down-payment at a 5-1/2% fixed interest rate (possibly lower) and a 30 year loan term, as you are now in jumbo loan territory.

The monthly mortgage payment of $5,000 at a 5-1/2% fully amortized loan would allow for a $900,000 loan and an approx. $8,000 monthly payment would be required for a loan of $1,400,000. Assuming a 20% down-payment of $225,000 would allow you purchase a home of $1,125,000 for the $5,000 monthly amount. Assuming a 25% down-payment of about $470,000 would allow a purchase price of $1,870,000 for the higher mortgage amount of $8,000.

As you can see, it is not just how much of a loan you can afford to get with your income, but also how much of a down-payment you can afford to put down.

url_not_allowed.mortgage-calc.com/mortgage/simple_results.html

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