When looking to purchase a home, two of the most common questions I’m asked are, 1) What’s the best rate? and 2) How much do I qualify for? I’ll address number one in my next blog post but for now I’d like to focus on number two.

         As a first time homebuyer, there’s never any harm finding out how much you qualify for. With today’s “stress test” used qualify mortgages at a rate almost double what you’re actually paying and prudent underwriting requirements, your max purchase price may be what you’re looking to spend anyway. HOWEVER, just because you qualify for that amount doesn’t mean you’re going to want to spend it. What I like to do is let you know what you qualify for and how much the associated payments will be.  Then  I ask  “how much are you willing to pay monthly?” for your mortgage and other monthly homeownership costs. A lot of first time buyers will then take a different approach to how much they actually can afford. You don’t want to end up being house poor. You want to be able to go out for a couple patio drinks with friends on a Friday after work or play on your rec sports team without going into debt. Life is all about balance.

         So let’s break down the fixed monthly expenses you can expect when buying a house.

1)  Mortgage principal and interest payment

2)  Property tax (you can deduct $700 from the gross taxes for you primary residence)

3)   Life/Disability insurance (the younger you are the cheaper it is)

4)  Utilities: Hydro/Gas, Water, Cable/Internet

5)  Property insurance

When first time buyers get a mortgage payment quoted to them, that payment is just your principal and interest mortgage payment, it doesn’t include all of the other expenses a house brings.

So using a real example;

          ** Extra's Include: 

NOTE: this is just an example and will fluctuate depending on house and area but is a good guideline.

         This example is a good indicator of what types of extra expenses are included in a house that may have been overseen. Make sure you work with a mortgage professional to help you figure out what is manageable for you so you don’t find yourself “house poor”.

Cheers!

Caily