Welcome back to our blog! This week we’re talking about purchasing power when it comes to buying a home.
Before you begin the house hunting adventures with us, let’s find out what your purchasing power is. Do you have a particular budget or monthly payment in mind? Take into account two important factors — what lenders will approve you for and what fits comfortably within your budget. Fortunately, the numbers will almost always line up but be mindful not to bite off more than you can chew.
Things to Note:
Your monthly housing costs should not be more than 32% of your monthly gross income.
Your total debt service (TDS) ratio should not be more than 40% of your monthly gross income.
To calculate your TDS simply add your monthly housing costs and your total debt payments.
We know the finance side of things can get a bit confusing which is why we provide you with direct access to our awesome lender. They will break numbers down with you to give you more insight into what your purchasing power is like, how much to save, potential things to do to increase your credit score and much more. For more info on how to determine your true purchasing power, give us a call!