All I want for Christmas is a new home…
The city is starting to get into the holiday spirit—festive decor, snow on the streets and we’re just over a month away from Christmas! If a home is on your Christmas wish list this year, we have a few tips to help make homeownership a dream come true.
Calculate your monthly expenses:
- Determine your household budget, which will take into consideration how much money your household brings in each month and how much it spends.
- Calculate your monthly debt payments, which helps you understand how much debt you’re already carrying. Take into consideration monthly payments for loans, cars, credit cards and lines of credit.
- Calculate your monthly expenses, by taking your household budget mins your debt payments. This will let you know how much you have leftover for monthly expenses (utilities, cable, etc.).
Determine what you can afford:
- Your monthly housing costs shouldn’t be more than 32 per cent of your gross monthly income. Housing costs include your monthly mortgage payments, property taxes and heating expenses (known as PITH for short — Principal, Interest, Taxes and Heating).
- Your entire monthly debt shouldn’t be more than 40 per cent of your gross monthly income. Your entire monthly debts include housing costs (PITH) plus all your other debt payments (car loans or leases, credit card payments, etc.).
Calculate your maximum house price:
- You will want to calculate how much mortgage you can afford.
- Consider mortgage loan insurance, which helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5 per cent.
The minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion. For CMHC-insured mortgage loans, the maximum purchase price or as-improved property value must be below $1,000,000. [CMHC]
Get a copy of your credit report:
- Determine your credit score and protect it (or improve it), to ensure your rating is in tip-top shape for mortgage application time. You can obtain your credit score from Equifax or Transunion.
Get a mortgage pre-approval:
- Do your research on mortgage rates, and look into pre-approval. Make sure you ask a lot of questions, and shop around. Decide where your down-payment will come from and how you’ll save for it (this helps determine how much mortgage you can qualify for too).
Plan for current and future costs:
- Keep in mind paying for things like lawyers, GST, inspections, etc.
- Budget for maintenance of the home, year-to-year.
Feeling motivated and ready to buy a home? See what homes are available or being built in Calgary or Airdrie on our website.