Homes ownership is a dream that many of us have and when you are ready to act on it, the first step is having a home buying budget put together.

Banks and financial groups look at two ratios when they calculate what mortgage you can qualify for.  Gross Debt Service Ratio (GRS) and Total Debt Service Ratios (TDS) are the main formulas that are used to determine mortgage qualifications.

The generally accepted maximum GDS is 30%.  This means that no more than 30% of your gross income should be used for principal and interest payments on your mortgage.

On a monthly basis if your monthly income was $5000 your could spend up to $1500 per month for monthly principal and interest mortgage payments.

In calculating TDS the ratio can go to 40% but it must cover all your fixed monthly expenses.  Your financial institution or mortgage broker can give you more information on this.