Its sort of a funny thing, when you sit down with a mortgage broker and they break your life down into numbers and percentages. How risky are you? How much debt do you have? And, most importantly, how much money do you make?
If you have ever been on the receiving end of a pre-approval that seemed astronomical to you – and you aren’t alone – then you may find this information interesting. So you have a down payment saved up, and you’re on top of your debts, on you make a moderately good income – does that mean you can afford a $300 000 home? Certainly not! Right? Usually mortgage mathematics only take a few expenses into account, and these are often guestimates (such as future utilities), and it can get more complicated. If you and your spouse apply for a mortgage, but only one of you has an income but both of you have debt, these calculations can be even less accurate.
Here is an interesting infographic regarding the average price of homes across the country and the amount of money you’d have to make annually to afford said home – these figures of course pertain strictly to mortgage cost versus income, and takes no other debts or expenses into account – still, interesting.