What can you afford?

When you prepare a budget, you will know what resources you can allocate to mortgage payments, living expenses and other financial situations. Everyone involved in financial decisions should also be involved. Your REALTOR^® can assist you in helping you establish a budget, review financial qualification guidelines established by financial institutions and even suggest some ways to obtain financing, either through traditional lenders or another institution.

You will need a down payment. This can be as little as 5% of the purchase price. However, this type of purchase requires a high-ratio mortgage and insurance. Fortunately, Canada Mortgage and Housing Corporation helps Canadians purchase their first home this way, through a federal insurance program. Your REALTOR^® can provide details on this program.

Collect the following to prepare your plan:

• Monthly rent or mortgage payments
• Utility payments (gas, water, power, telephone)
• All other monthly expenses (such as food, child care, dues, etc.).
• Annual or semi-annual expenses (such as insurance, car repair, taxes).
• Non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type. Records or an estimate of personal expenses (entertainment, travel, etc.)
• Credit card statements
• Allow for unexpected items such as medical emergencies, travel and education.

Subtract expenses from income. Could remaining funds be directed towards a mortgage, debts or additional savings? How will a home purchase fit into your budget? Also consider items like insurance, taxes, repairs and maintenance.

What Can I Afford?

There are two types of costs in buying a home -- the initial amount you will need for your purchase and the ongoing costs of paying back your mortgage along with monthly operating costs. The largest one-time cost is the down payment. It usually represents 5-10% of the total price of the property.

Typical One-time Expenses:

Mortgage application and appraisal fee
Property inspection (optional), due at time of inspection
Legal fees, due at the time of closing
Legal disbursements, due at the time of closing
Property survey (sometimes provided by seller), due at the time of closing
Land transfer, deed tax or property purchase tax, due at the time of closing.(in Quebec within three months following signing)
Mortgage interest adjustment (if applicable), due at the time of closing
Home and property insurance, at closing and ongoing
Moving expenses, due on the date of move
PST on High Ratio mortgages
Realty Tax Holdback

Typical Monthly Expenses:

Mortgage payments
Maintenance (this could be condominium fees, or allocated maintenance fees)
Property and content insurance
Property taxes
Utilities

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1. Determining your needs

Learn
- Your Lifestyle
- Location, Style and Cost
- Why is Location Important?
- Choosing a Neighbourhood
- Your Housing Needs
- Types and Styles of Homes
- What Can I Afford?
- Your Team and Their Roles
- Agents
- Contractors
- Appraisers
- Lenders
- Mortgage Brokers
- Lawyers/Notaries
- Home Inspectors
- Insurance Brokers

Plan
- Neighbourhood Features Checklist
- Monthly Expenses
- Your Team of Professionals Worksheet

Do
- Home Features Checklist
- Home Hunting Worksheet

2. Arranging a mortgage
3. The offer
4. Closing
5. The move