How to budget for your home purchase.
As a general rule, your safety zone is approximately three times your gross (before taxes) annual income. Keep interest payments low by having at least 25 percent of the amount for the down payment.
To get a better idea of how much you can afford for your monthly housing expenses, divide your gross annual income by 12 and then multiply that amount by 32 percent. This is what you’ll need to cover your monthly mortgage principal and interest, property taxes and heating expenses.
Don’t forget those “extras,” such as closing costs (including legal fees and land transfer taxes), home insurance and moving expenses.
HOT TIP!
Listen up, first-timers: The Home Buyers’ Plan allows you to withdraw up to $20,000 a piece from your RRSPs to put toward the purchase or construction of your first home...tax-free! For more information on the plan and to see if you meet the HBP conditions, go to the “Homeowners” section at cra-arc.gc.ca.
