“How much house can I afford?” This is a common question. Use our handy calculators to get an idea. You supply your income information and it calculates how much you can afford. GO HERE for this plus mortgage calculators and more.
Accurately calculating how much house you can afford can be a little complicated but here are the basics. Start by calculating how much money you can borrow based on your income and monthly debt payments. Generally, the sum of your total monthly home payment (mortgage payments + real estate taxes + mortgage insurance) and your total monthly debt payments (like student loans, car payments) should be less than 36% of your pre-tax income.
Mortgage lenders also look at your savings to see what kind of down payment you can afford. Using your borrowing potential and what you have available for a down payment lenders can calculate a comfortable home value for you.
The type of mortgage you choose can have a dramatic impact on the amount of house you can afford, especially if you have limited savings. FHA loans generally require lower down payments, as low as 3.5% of the home value, while most conventional loans require up to 20% of the home value as a minimum down payment.
Contact Judy and the House Into Home team today for assistance understanding this, using online calculators, connecting with a local mortgage lender, and to create your own personalized home-buying game plan.