TOTAL COST OF HOME OWNERSHIP

The maximum amount of money that a mortgage lender will allow you to borrow depends on two tests. The first test, which could be called the allowable monthly housing cost test, ensures that your monthly mortgage payments will not exceed 28% of your gross annual income. The second test, which could be called the allowable total monthly debt payment test, ensures that your total monthly payments for all debt including your mortgage payments do not exceed 36%