That’s the benchmark price in Vancouver. Let’s say one has $300k for a downpayment. What does the household income, pre-tax, have to be to afford that home?
I know there are online calculators, but I’m not sure how accurate they are, and I figure this group will be more knowledgeable.
Typically, when you’re looking for a safe mortgage, you’ll want the mortgage to be no more than 30% of your gross income. You’ll want to run a mortgage calculator with the numbers of any loan information you’re working with, then use that payment to calculate what the debt to income ratio will be. Some people lean towards 35 or even 40 percent, but you want to stick close to 30 percent or below (ideally 28 percent or less). You’ll want to also consider the costs of owning a home of that value. The maintenance will probably be fairly high. Adjust for any upcoming big expenses, like the roof, the siding, any window repair, the HVAC/water heater, etc. Those can add up fast.
Good luck and report back!
Thanks. I always wonder what the reasoning for that percentage of gross income heuristic is, and whether the reasoning still applies today, given the state of the housing market. Obviously, there are risks to stretching too far, but there are also countervailing risks to staying out of the market when one can manage to make it work.