How much money can I borrow?

If you are planning on purchasing a home, it's important to first determine "how much money can you borrow". When you borrow money from a bank to purchase a home, it's called a mortgage. The banks will look at 3 different factors in order to determine how much money they will lend you.

1) Your income
2) Your credit score
3) Your debt


Your income

Banks will examine how much money you (and the other people purchasing the home with you) earn. They will request a T-4, or a pay statement to confirm your income. You can use online calculators to determine a "ball-park" figure. For example, at today's interest rates (5 year fixed 3.99%), if you earn a combined income of $70,000, you can obtain a mortgage of $400,000 at a 35 year amortization. If you choose a variable rate, you can obtain a mortage of $521,000.

Your credit score

Your credit score will also have an affect on obtaining a mortgage. You should check your credit score at equifax or transunion. If you have past credit problems (ie bills that went to a credit collection agency), then it might affect how much money you can borrow.

Your debt

The banks will also examine your month debt obligations. If you have car payments, credit card payments, or other loan payments, then this will also affect how much you can borrow. If this is a concern for you, it would be best to pay off one (or more) sources of debt or rearrange your debt so that the monthly obligations are less. However, you should make sure that you are comfortable with your debt, before obtaining a large mortgage.

If you are interested in purchasing a home in the GTA, you can contact us at buyers@culturerealty.com or 1-877-277-0190.


Culture Realty Solutions Inc.
Real Estate Brokerage
1-877-277-0190