This is part 4 of a series of how I paid off $95,778.5 in less than 3 years.
Trying to determine how much we could afford was quite hard for me. When we were renting we lived in a town house, it wasn’t big by any means, but it had enough room. So when we started our home search, we started looking at houses. I was so excited that I would have much more space then we did in our town house. To my surprise, we soon realized that a house was over our budget for where we wanted to live, so we began our search for a condo. We looked at many condos before we made our decision. I did a lot of praying to double check that I was making the right decision. When we walked into the condo that we ended up purchasing, it just felt right, it felt like home. So we took that leap and purchased.
There are many calculators available online where you can key in your numbers to determine how much of a mortgage you can afford. You can check out the “How much can I afford calculator” on BMO’s website. I would also recommend doing a pre-approval with your local bank to determine exactly how much you qualify for. The calculator will give you a rough estimate, where as a pre-approval with a bank will help you determine exactly how much you qualify for, based on your credit, income, assets, and liabilities. If your down payment is less than 20%, you will require further approval from one of the mortgage loan insurance companies in Canada. CMHC, Genworth, or Canada Guaranty. These mortgage insurance companies protect mortgage lenders against defaults. Keep in mind that their qualification criteria may be different from your banks. Your mortgage lender can advise you on their qualifications.
Click here for part 5