How Much Home You Can Afford

By
Real Estate Agent with Mike Bowman
 

Home buyers are often unsure about the financial aspects of buying a home, and you
may have many questions swirling in your head. How much can I afford? Do I need
a large down payment?



Your home price range will be determined by your income, credit history, the cash
you have for a down payment and closing cost, and your debt. How much you earn compared
to how much you owe will likely determine how much the bank allows you to borrow.



The financial rule of thumb is: your total monthly debt service, which will include
your monthly mortgage, shouldn't be more than about 36 percent of your gross monthly
income. Most experts say that your monthly housing expense, including taxes and
insurance should not exceed about 28 percent of your gross monthly income.



Naturally, every situation is different, and each lender has different rules about
working with buyers. A number of choices within your control can affect your monthly
payment as well. For example, you might choose an adjustable rate loan, which has
a lower initial payment than a fixed rate program. Similarly, a larger down payment
may lower your monthly payment.



If you'd like more information about how much home you can afford, please call or email. I can help you get the mortgage information you need. Call me at 817 217-0005 or cherylsellshomes@gmail.com

Comments (2)

Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I always caution folks to be a bit conservative and make sure they have reserves in case something needs repair, replacement or the economy shifts.... It is good not to overspend and make sure you are still enjoying life and saving for the future.

Mar 30, 2011 03:58 PM
Scott Mazza
Stewart Title of California - Ventura, CA

Very important!! I have seen many a folk with eyes bigger than their income. It is well worth it to be honest with the client and put them in a home they can afford. Make it a great day.

Mar 31, 2011 02:49 AM