How Much Mortgage Will A Home Rental Payment Carry?
If you cannot pay for a home in full, you are renting. Either you are renting someone else's home or you are renting the money to be able to call it your own home. The big difference is in who gets the equity from your monthly
payments. You can rent money via a mortgage and keep the equity or you can add to the landlord's equity every month. Much better to pay yourself by renting the money to buy a home.
What can you afford? Well, you are probably paying rent plus utilities plus insurance and maybe minor repairs. So chances are good you can afford a mortgage payment based on your rent payments.
This first calculation should be How Much Mortgage would your current home rent payment carry. It's easy to figure out yourself with an excel spreadsheet. Or you could just ask me. Jerry@JerryCharlton.com
But here are the instructions to do it yourself.
You need the formula for a Microsoft Excel spreadsheet based on Canadian Mortgages.
This present value formula is for Canadian Mortgages with Interest Calculated Semi-Annually.
Replace Mortgage Rates with your rate or a cell reference. Same for Amortization and Payment You Can Afford.
=-((PV((1+Mortgage Interest Rate/2)^(1/6)-1,Amortization in Years*12,Monthly Payment You Could Afford)))
The next step is to divide the mortgage amount by the amount you need to finance.
Example 223,231.11 / 95% - 223,231.11 = the 5% Down You Need $11,749.01
Down Payment Plus Mortgage equals $234,980
Here's a quick reference table for you to see the possibilities. Of course, you still would need to qualify for a mortgage, but at least you would know what monthly payment range would be comfortable for you.
| Rent Payment | Mortgage | Interest Rate |
| 2.50% | ||
| $ 1,000.00 | $223,231.11 | Amortization |
| $ 1,100.00 | $245,554.22 | 25 |
| $ 1,200.00 | $267,877.34 | |
| $ 1,300.00 | $290,200.45 | |
| $ 1,400.00 | $312,523.56 | |
| $ 1,500.00 | $334,846.67 | |
| $ 1,600.00 | $357,169.78 | |
| $ 1,700.00 | $379,492.89 | |
| $ 1,800.00 | $401,816.00 | |
| $ 1,900.00 | $424,139.11 | |
| $ 2,000.00 | $446,462.23 | |
| $ 2,100.00 | $468,785.34 | |
| $ 2,200.00 | $491,108.45 |
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