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How Much Home Can I Afford?

Owning a home is no doubt one of the most satisfying investments you can make. It gives you a sense of independence and success. Many people who do not have homes yet struggle to find the perfect homes for their families. A good part of these individuals has little or no idea where to start or how much home they can afford.

Below are some of the basics you need to know to determine what you can afford and what that will get you.

Use our Home Affordability Calculator

How much can you actually afford? Mortgage Calculator vs. Affordability Calculator

You can determine your if your ideal house is in line with your budget by estimating the mortgage payment amount with a Mortgage Calculator. It can take into account expected:

    • Loan Amount,
    • APR,
    • Loan Term,
    • Closing Costs, property taxes, PMI and insurance.

But, mortgage lenders will calculate the amount of the loan you can get based on more personal information which can include;

    • Target monthly payment,
    • Your income,
    • Size of the down payment
    • and debt expenses.

This is where a Home Affordability Calculator can be of help. Most Home Affordability Calculators & Loan Officers will analyze:

    • Purchase Price 
    • Down Payment – if you place a larger deposit, you will need to take a small loan. You can also afford to buy a higher-priced house. Down payment can be money from your savings that you will give the seller. The mortgage will cater for the rest of the buying price usually expressed as a percentage.
    • Expected Interest Rate and Credit History - if you have a good credit history, you are in a better position to get lower interest rates. Good credit history means that you could take a bigger loan.
    • Length of Mortgage 
    • Future HOA dues, property taxes, PMI and insurance 
    • Gross income – this is a vital aspect. You will include all income before taxes; including base salary, commissions, overtime bonuses, tips, investment income, rental income, alimony and child support.
    • Monthly Debt Payments - You will include all your debt payments, including but not limited to credit cards and student loans. The calculator and loan officer will use this to determine your debt-to-income ratio. This ratio will help make sure you still have cash left over to cover unexpected repairs or financial emergencies. But the requirements can be different for each loan, so it is important to check with your loan officer.

Use our Home Affordability Calculator

Remember that buying a house is not a life and death matter. Give yourself financial breathing room, there is no need to empty your savings. A good tip is spending less than you can afford. No one has any idea about what is going to happen tomorrow; you may lose your job or suffer heavy losses in your business. There are several options to consider, especially for first-time home buyers. look to family for gifts that can help you take a smaller loan or get help from a down payment assistance program.

Contact one of our local lender partners for more information.