Rent vs. Buy

Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. The first steps in buying a house are ensuring you can afford to place at least 5% of the purchase price of the home as a down payment and determining your budget. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision.

To help you see how much you can afford, there are two simple rules that lenders use to determine how much of a mortgage you qualify for. These rules are governed by Canada Mortgage and Housing Corporation (CMHC) which is Canada's national housing agency and Canada's premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research. Visit them at http://www.cmhc-schl.gc.ca

The first rule is that your monthly housing costs should not exceed 32% of your gross monthly household income (GDS). Housing costs include monthly mortgage payments, taxes and heating expenses. If applicable, this sum should also include half of monthly condominium fees. Secondly, your entire monthly debt load should not be any more than 40% of your gross monthly income (TDS). This includes housing costs, and other debts such as car payments, personal loans, and credit card payments. If your credit is in good shape than you can go to 44% TDS with most lenders.

*Mortgage Loan Insurance is usually required with a down payment of 20% or less - you should check with your Financial Institution.