How much to spend on a home in the city

Buying a house in a major city with 32% of your GDS is unrealistic.

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From the February/March 2014 issue of the magazine.

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The Canadian Mortgage and Housing Corporation (CMHC) says housing costs shouldn’t exceed more than 32% of your gross monthly income—a figure called your Gross Debt Service (GDS) ratio. However, buying a house in a major city with 32% GDS is unrealistic, says mortgage broker Rob McLister. Take Toronto, where the average bungalow costs $568,000. A family with a $96,000 annual income would be priced out of the market. But by increasing their GDS to 38% that same home is now within their reach. In fact, a GDS of up to 39% can be reasonable, says McLister, provided the higher debt load is offset by other strengths like outstanding credit, good future earnings potential and sufficient emergency savings.


*Assumes a 3.39% 5-year fixed rate 25-year amortization mortgage, 0.75% property taxes, 10% down payment; includes heating costs.

One comment on “How much to spend on a home in the city

  1. So — is it the percentage GDS that needs to change or the price of the house ?. House prices are linked to income and rents worldwide. If 100K prices families out of the market — the prices are likely due to correct. Changing the GDS percentage qualification only makes the pricing problem worse.


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