Homebuying Step by Step: Your Guide to Buying a Home in Canada
STEP2 Are you financially ready to own a home? It’s important to figure out how much you can afford to spend before you start looking for a home. Your mortgage payment will probably be the biggest expense, but there are other costs you should be aware of. You don’t want any unpleasant surprises! The more you know about your current financial situation, the more prepared you’ll be when you meet with your lender or broker. These calculations will clarify your current financial picture and help you figure out how much you can afford.
Calculation 1: How much are you spending now? First, see how much you currently spend on a monthly basis. Consider the following sample expenses.
Household expenses groceries tuition clothing gifts
Entertainment expenses dining out spectator events magazines and books hobbies travel
Loans and debts credit cards car loans
Savings and donations RRSP TFSA savings accounts charitable gifts
personal loans lines of credit student loans mortgages for properties already owned
housing maintenance child care
Second, subtract that number from your total monthly net income (the amount of money your household earns on a monthly basis after taxes and deductions). The difference is how much money you have left each month after expenses.
Use the Household budget worksheet in Step 2 of the workbook.
CMHC offers several online calculators that help with everything from figuring out your household budget to calculating your maximum home price and monthly payments.
To use these tools, visit cmhc.ca/calculators .
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