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How much house can I afford?
 April 24 2015     Posted by

The maximum percentage of your income most lenders will allow to be attributed toward housing costs (principal and interest, property taxes plus an allowance for heat costs, say $75 to $100 per month) is usually 35% of your combined, gross income (this is called the Gross Debt Service Ratio). When all of your other debt payments are added in (car loans, credit card payments etc.,) the total including your housing costs should not normally exceed 42% of your combined gross income (this is called the Total Debt Service Ratio). If your beacon score/credit rating is above 680 then many lenders will dispense with the Gross Debt Service Ratio, instead imposing only a Total Debt Service Ratio ceiling of 44%.

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