Lesson 5: Can You Afford the House You Want? Use the “Gross Debt Service Ratio” aka GDS formula. Your calculation must be less than 32% to be able to afford.

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Presentation transcript:

Lesson 5: Can You Afford the House You Want? Use the “Gross Debt Service Ratio” aka GDS formula. Your calculation must be less than 32% to be able to afford the house. If your answer is greater than 32%, you cannot buy the house!

Answers to assignment: 2. a) 19%  Yes they could afford this house. b) 42%  No c) 30%  Yes (Note: Change annual amounts to monthly to use in formula.) 3. Note: mortgage payment = $ %  Yes

Part II: What is the Most Expensive House You Can Afford? Fill out the chart to see how much you can spend on a house. Answers: 1) $ 153, ) $ 78, ) $ 79,685.45