Buying a house involves raising a down payment and paying a monthly mortgage, which averagely lasts around 30 years, depending on the home loan you can afford and are offered based on your Total Debt and Servicing Ratio (TDSR). There are other costs such as legal fees as well, but let us focus on the big money.

TDSR sets the limit to how much a homebuyer can borrow. Financial institutions must ensure that borrowers’ monthly repayment for all debts does not exceed 60 per cent of their monthly income. This includes the mortgage, credit card bills, car loans, personal loans, and so on.

Down payment: It is the lump sum you will pay upfront that funds equity in the property and proves to lenders that you have got skin in this homeowner game. Down payments vary. In the past, some lenders dismissed the down payment altogether. Today, 25 per cent is preferred for the first homebuyers and often this gets you the best rates. Sometimes parents or friends can offer help with the down payment. If you have a choice, take a gift rather than a loan to raise the money for the down payment. Not only for obvious reasons, but because lenders will add that additional debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio.

Monthly mortgage payments: This is what you will pay each month. In most cases, a mortgage includes the loan principal and interest (both amortized over the life of the loan) plus homeowners insurance and property taxes (pro-rated). The amount the homebuyer can borrow depends on their Total Debt Servicing Ratio (TDSR).