# Solo first time buyer in need of advices



## MrGreen (Mar 6, 2018)

Hello everyone,

I want to buy my first house next year, but I don't know if that is doable. 

Here is my situation :

Age: 28
House value wanted in current area : 220k-240k
Cashdown : I'll have 20% for whichever the price in this range
Annual income : 40k
Debts : None, I have a car but i will be done with the payments next month.

Is it possible to buy a house in this price range, alone, with this kind of income? 

What is your opinion on the HBP program?

Thank you!


----------



## Spudd (Oct 11, 2011)

Try a mortgage calculator on any of the banks' websites, here's an example:
https://tools.td.com/mortgage-affordability-calculator/

If the calculator says you can afford it, then you probably can get a mortgage, assuming you have a decent credit rating. Next step would be to talk to the bank and find out.


----------



## MrGreen (Mar 6, 2018)

Strangely TD is always the one with the biggest offer but such a huge margin I don't know what's the catch? Like... 30k more than any other bank calculator.


----------



## Mortgage u/w (Feb 6, 2014)

Here are the calculations you need to qualify:

*GDS* (Gross Debt Service Ratio)
Add:
- mortgage payment (needs to qualify on a benchmark of 5.14% or contract rate + 2%; use the higher of the two)
- heating cost of minimum $100/mth
- property taxes
Divide the above total by your gross income (be consistent in using either monthly or yearly amounts)
- the result cannot exceed *39%*

*TDS* (Total Debt Service Ratio)
Add:
- any monthly debt obligations that will appear on your credit bureau (car loans, credit cards, student loans, etc) 
- combine the monthly debt obligations to your additions in the GDS calcuation (mortgage pmt, taxes, heating)
Divide the total above by your gross income (again, stay consistent with monthy vs yearly)
- this total cannot exceed *44%*

If you put less than 20% down, then you will need to add the mortgage insurer premium which varies between 2.80% and 4.00% of your mortgage loan. This premium is added to your loan and will increase your monthly payment.

As for the HBP, I'm not a fan of it. I find it somewhat misleading since you need to repay the loan you essential borrowed from yourself, wiping out any gains you could have potentially had if the money remained invested.


----------



## twa2w (Mar 5, 2016)

Good response by mortgage u/w. 
Those % figures for debt servicing are the max normally allowed.
Personally I would be happier seeing your figures at 32% and 40%. 
This allows for more flexibility in your budget, especially if rates decide to climb.
You also have to consider your personal situation. If you are a young lawyer articling at a small firm and your income is going to grow quickly, I see no problem with maxing out GDS TDS ratios. If you are in a job where there is not the same room for advancement or income increases, you may want to be a bit more conservative. Your decision of course ( and the banks).
I also agree on the homebuyers plan but there are some times when it makes sense.
Best of luck. 
Most banks will also do a pre approval of sorts and will often commit a rate for 90 or 120 days from your preapproval which may help if rates go up when you start looking.


----------



## Nerd Investor (Nov 3, 2015)

Mortgage u/w said:


> Here are the calculations you need to qualify:
> 
> *GDS* (Gross Debt Service Ratio)
> Add:
> ...


I tend to agree. I get why it is in place, and if most of your savings are in an RRSP then it makes a ton of sense. You're much better off using the HBP to ensure you can make your 20% down payments vs not putting 20% down. But if you have non-registered assets, you are better off exhausting those.


----------



## twa2w (Mar 5, 2016)

Besides your down payment, you will also need funds to cover
Legal fees
Land transfer tax
Moving expenses
Possible deposits for utilities

You may want to have money to ensure furnace is serviced, ducts and carpets cleaned, and chimney cleaning if wood burning fireplace.

Ensure your offer states that appliances ( unless you have your own but can be a negotiating point and this varies by province) and window coverings are included. Even if the drapes are ugly, it will give you time to find what you like without tacking old sheets up.

Dont forget you will need a lawnmower, rake, snow shovel, hose etc.( look in your parents garage;-)) 


Check local bylaws for parking, car washing( in Calgary you cannot wash your car in your driveway or street).


----------



## Mukhang pera (Feb 26, 2016)

twa2w said:


> Check local bylaws for parking, car washing( in Calgary you cannot wash your car in your driveway or street).


That's a good one! Was that bylaw - which sounds like a "no washing car at home" bylaw - passed by a city council whose members all own carwash businesses?


----------



## twa2w (Mar 5, 2016)

No, not as far as I know. The premise is that washing your car on the driveway involves allowing soaps and detergents to run down the storm sewer system which feeds directly into the river system. This harms the eco system.
Car washes are required to run water through the city sanitary sewer where it gets treated.
See us Calgreedians are really envronmentally friendly - in our own back yard :-D


----------



## lonewolf :) (Sep 13, 2016)

Mukhang pera said:


> That's a good one! Was that bylaw - which sounds like a "no washing car at home" bylaw - passed by a city council whose members all own carwash businesses?


 It is classic bull market thinking @ bull market highs it is we including environment. This is a large fractal with extreme bull market thinking @ the bottom people will not be worried about the environment which will probably be good there will be few if any environmentalist wanting to tax us to death for causing global warming. ( though man made global warming is a bogus theory)


----------

