Affordability Rule #1
Your monthly housing costs should be no more than 35% – 39% of your average gross monthly income. This percentage is known as your gross debt-to-income or gross debt service (GDS) ratio.
Housing costs include:
- Your monthly mortgage payment (principal and interest)
- Property taxes
- Heating expenses
- 50% of condo fees (if applicable)
Affordability Rule #2
Your monthly debt load should be no more than 40% of your average gross monthly income. This percentage is known as your total debt-to-income or total debt service (TDS) ratio.
Your monthly debt load includes:
- Housing costs (amount calculated in rule 1)
- Car loans or leases
- Credit card payments
- Line of credit payments
- Other mortgage payments
As always, if you have any questions, please do not hesitate to reach out to me.