Mortgage Qualifier Calculator Ontario

When you are planning to buy your first home, one of the first things you should do is determine how much you can afford to pay. You should be able to pay at least 5 per cent of the purchase price as a down payment. Just as important as having this is your ability to make the scheduled payments without limiting your budget too much.

A mortgage qualifier calculator takes you through the process of determining how much you can safely borrow. It takes into account your monthly income (as an individual or household), the down payment required on your choice of property, your other monthly costs (including credit payments and bills), and specific details about your mortgage (interest rate and amortization period).

Here are some definitions to ensure you input the correct numbers in the calculator:

Annual income:

If you are buying the home as an individual, this refers to your gross annual income. Some calculators ask for the monthly income, so make sure to provide the right information. For married couples, this should be the total of their combined gross annual income.

Purchase price:

This is the amount you have to pay to own the property. It is the actual price of the home without including closing costs.

Total monthly payment:

This is the total amount you will be required to pay each month, and is a sum of the principal, interest, heat, and taxes to be paid each month. The calculator may also request the amounts separately of:

  • Monthly payment (PI) – Total monthly principal and interest only, without consideration of property or maintenance taxes or even heat.
  • Monthly heat – Total monthly costs for your home’s heating. This amount should reflect your monthly payment on bills, so you may include other costs in the “heat” category, including water, cable, telephone, hydro, etc.

Interest rate:

The interest rate offered on your mortgage

Mortgage amount:

The total amount you qualify for a mortgage

Amortization years:

How long you will repay the mortgage in years

Annual property taxes:

This is the yearly property tax paid on the home you are planning to buy

Condo fee:

This is the monthly fee charged for ownership of the condominium you intend to purchase. Fifty per cent of this fee is usually added to your Gross Debt Service (GDS) to calculate the maximum mortgage amount you qualify for.

Cash on hand:

This refers to the total amount of money you have available to pay for the down payment and closing costs. Ideally, you should make a down payment of between 10 and 20 per cent of the purchase price of the property. However, you can make a down payment of 5 per cent if your home costs less than $500,000. You are required to make an additional 10 per cent down payment for the amount above $500,000, and an extra 20 per cent for the amount over $1,000,000.

Mortgage fees:

The fee charged by the lender for originating the loan

Other closing costs:

This is an estimate of all closing costs for the mortgage loan, including appraiser fees, filing fees, and other miscellaneous costs payable.

Contact Northwood Mortgage experts

If you would like some professional advice or assistance applying for a mortgage, our mortgage experts can help you navigate the system and find the best package for your circumstances.

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