REALTORS® Association of Edmonton
 
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Figure Out How Much You Can Afford

Before you start looking for your dream home, let’s find out how big you can dream. Knowing your true budget is the first and most important step in buying a home. Why? A home is a big purchase. It’s probably the most expensive thing you'll ever buy and there are lots of expenses you might not even know about. Everybody’s total costs are different, but it’s almost guaranteed you won’t have that much money saved up. Hopefully you have enough for a nice down payment, but for the rest…

  • Yes, you need a mortgage
  • How much will a bank will lend you?

The first step in determining how much a bank will lend you is to understand how much you can afford each month. This is determined using two lending principals.

The first lending principle is that your monthly housing cost should not exceed 32% of your gross monthly family income. This principle is known as the Gross Debt Service (GDS) ratio calculation.

The second lending principle used, the Total Debt Service (TDS) ratio calculation, is that your monthly housing cost and payments on all of your other debts (including loans, credit card and lease payments) should not exceed 40% of your gross monthly income.

Next Step: Arrange a Mortgage

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©2011 REALTORS® Association of Edmonton 14220 112 Avenue, Edmonton, Alberta T5M 2T8T: 780-451-6666 TF: 1-888-674-7479 F: 780-452-1135

 

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identify real estate professional who are members of CREA (REALTOR®) and/or the quality of services they provide (MLS®).

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The REALTORS® Association of Edmonton (Edmonton Real Estate Board), founded in 1927 , is a professional association of over 3,200 Brokers and Associates in the greater Edmonton area. The Association administers the Multiple Listing Service®, provides professional education to its members and enforces a strict Code of Ethics and Standards of Business Practice.

The Association advertises property listings and publishes consumer information on the Internet at REALTOR.ca, as well as in the Real Estate Weekly.
The REALTORS® Association supports charities involving shelter and homelessness through the REALTORS® Community Foundation.