How Much to Spend on a House in Calgary?
Calgary has many houses, condos, townhomes, and new builds just waiting for you! But determining what you can afford to spend on a home in Calgary is difficult. You don’t want to have an outrageous monthly payment or break your budget to match a house’s purchase price.
With the many Calgary houses for sale and the help of our professionals, you’ll find the right home that meets your needs and preferences while being affordable.
How Much Does the Average House Cost in Calgary?
There are many neighbourhoods throughout Calgary that appeal to all kinds of buyers. Whether they want a home that’s more suburban but has easy access to amenities or they want to be within walking distance to the city’s action and good schools, there’s a real estate property with your name on it!
The Daily Housing Summary results for May 2021 reveal the average cost of different types of homes in Calgary:
- The average price of detached single-family homes is $601,916
- The average price of semi-detached houses is $506,115
- The average price of row and townhouses is $332,045
While these figures give you an idea of the purchase prices to expect, you may not be certain as to whether or not you can afford to buy. The following rule can help you determine which prices are within your budget.
What is the Rule for How Much to Spend on a House?
A good rule to keep in mind when purchasing a home is the 28/36 Rule for Mortgages. It consists of budgeting 28% of your gross monthly income for housing expenses and 36% of your gross monthly income for debt. This will cover:
- Property taxes
- Heating costs
- Homeowner’s insurance
- Housing association fees
- Condo maintenance fees
- Debt: principle and interest
Mortgage lenders use this rule to get your debt-to-income (DTI) ratio. For example, if your gross monthly income is $8,000 before taxes and other deductions, multiply it by 28% to get $2,240, which is the highest monthly mortgage payment you should pay.
Multiply your gross monthly income ($8,000) by 36% to get $2,880, which is the highest monthly debt payment you should pay. With this rule in mind, it will be easier to determine whether or not you can afford a house’s purchase price.
Remember that there are many costs associated with homebuying, including a deposit, a down payment and closing costs that usually range from 1% to 4% of the property’s total purchase price.
How Much Do You Have to Put Down on a House in Alberta?
First-time buyers often think that they’re obligated to put a 20% down payment on every house they want to buy. This is a myth. The reality is that the down payment amount depends on the house’s purchase price and the buyers’ financial situation.
Buyers can put a 5% minimum down payment on homes with a purchase price of $500,000 or less. If homes are priced at $500,000 and under $999,999, buyers can place a 5% minimum down payment on the first $500,000 and then place a 10% down payment on the amount that remains. A lower down payment has a few downsides: you may need to purchase mortgage loan insurance and you will have higher monthly mortgage payments.
Opting for a 20% down payment is often a smart long-term decision for homebuyers because they can borrow less money and benefit from a lower interest rate.
It’s essential to prevent overspending lest you have a monthly mortgage payment that causes harm in your day-to-day life. Always assess your situation and speak with a real estate professional. For more details, view our blog post: How Much Down Payment Should I Put on a House?
Purchase the Right Property with Our Real Estate Experts
Calgary House Finder can assist first-time and seasoned homebuyers with any property hunt and budgeting for a monthly mortgage payment you can afford. TO live a comfortable and stress-free life, you don’t need to break the bank.