Buying a home is always a new and exciting experience. The first thing for a buyer to consider is how much they can afford.
Here are some ways for home buyers to get in shape to find the home that fits their budget:
Debt to income — Home buyers should spend 28% or less of their gross income, and should be careful not to exceed that amount. However, maximum debt to income ratios differ for each mortgage program:
- FHA 45 to 50% max
- VA 45 to 50% max
- Conventional 28 to 36%
Debt payments — A home buyer’s mortgage, credit card bills, car and student loans, and any other debts shouldn’t exceed 36% of their gross income.
Down payment affordability — The more money home buyers can put down, the lower their monthly mortgage payments will be.
Costs — Home buyers must maintain strong discipline with their budget and know that there are many costs to owning a home aside from a down payment and monthly mortgage payments.
Affordability calculator — Buyers can use a home affordability calculator online to get a better estimate on what they can afford and plan accordingly.
As long as buyers can properly prepare for the costs associated with buying a home, they’ll have the keys to the home of their dreams in no time.
For more information about finding out what you can afford, feel free to shoot Vincent Redd an email or give him a call. Always happy to help!
Senior Mortgage Consultant
Efax: (773) 435-6468
Cell: (773) 255-1698