The Globe and Mail recently published a very interesting and eye opening, The Real Life Ratio calculator, a guide to how much house you can afford.

Is your mortgage leaving you house poor?

Is your mortgage leaving you house poor?

In scenario we tested, a childless couple in their mid 30’s, jointly earning $75,000 carrying a high ratio 90% mortgage on a $600,000 house and maintaining the basic necessities of their lives, would have to spend 86.72% of their income on housing only.

Assumptions are that monthly payments are: mortgage $1,800, property tax $420, insurance $50, utilities $250, car lease payment $400, car insurance $200, other monthly payments $800. Proving they wish to save $1,000 per month, the calculator measures their Real Life Ratio to be 86.72% which would place them in the financial stress overload.

Should this couple decide to have a child, their expenses would sky rocket and they would not be able to afford the house.

Click on the Is your mortgage leaving you house poor? to proceed to The Globe and Mail article.