A home is most likely one of the biggest purchases you’ll make in your lifetime. Like any major expense, you should plan on saving for your new home long before you begin the actual home-buying process. While your focus will be on coming up with your down payment and determining the maximum amount you can spend on your new home, you should also think about how this significant purchase will impact your monthly budget and overall financial situation once you’ve moved in.
You’ll also want to consider getting a mortgage pre-approval to help give you a better idea of your monthly payment amounts as well as how much your down payment will be.
Your monthly mortgage payment, while likely to be substantial, will be only one expense among the many associated with owning a home. In addition to your fixed monthly expenses, like food, clothing, gas, phone, medications, plus any lifestyle/entertainment costs, there’s your other debt (credit cards, loans) to consider.
Here are some of the other specific home ownership costs you’re likely to be juggling every month (and want to factor into any realistic budget):
You may also want to think about having a “rainy day” fund to cover those emergency home repairs (plumbing, electrical, etc.) that could occur at some point—usually when you’re least prepared to pay for them. In addition, you may want to give some thought to your future income and expenses, asking yourself questions that could include:
Here are two formulas used by many mortgage lenders to help give you a starting point when determining how much you’ll need to cover your housing costs and total outstanding debt.
Consult your mortgage specialist for help identifying and budgeting for all the costs associated with home ownership.
The strategies, advice and technical content in this publication are provided for the general guidance only and benefit of our clients. This publication is not intended to provide specific mortgage, financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. Readers should consult their own professional advisor when planning to implement a strategy to ensure that individual circumstances have been considered properly and it is based on the latest available information.
Personal lending products and residential mortgages are offered by Royal Bank of Canada and are subject to its standard lending criteria. Some conditions apply.