The question, how much house can I afford, is one where a lot of people have gone wrong in calculating their house affordability. Unfortunately, if you get this wrong, it can end up ultimately ending in foreclosure. You need to fully understand how much a house will cost not only upfront but long term as well. To make sure that you can afford not only to get into your house but you can actually afford to live there. I have outlined some tips below. You will find a mortgage calculator and affordability calculator here as well.
House Affordability Guidelines to Follow
Before you begin the home buying process, it's important to determine exactly how much money you can afford to spend on your new home. Knowing this information up front can save you a lot of time and effort and is one of the keys to long-term successful homeownership. Here's how. To determine how much you can realistically afford you'll want to determine how much you'll have for a down payment. In general, you will need to have at least 10% of the home price for a down payment. If you want the best loan terms, you should plan to have at least 20% for a down payment. When making lending decisions banks also consider the cost of housing in comparison to your income. Your monthly housing expenses including your mortgage, taxes, and insurance should be no more than 28% of your monthly income. Of course, your other debts also play a factor. In general, lenders want your total debt to income ratio, which includes things like credit card debt, car loan and student loans to be no more than 36%.
Mortgage Affordability Calculator
Use this personal housing affordability calculator below. Simply fill out this little calculator sheet. Input all of your incomes. Lists some of your debts. Input or find out the real estate taxes you would have to pay as well as insurances. etc. Otherwise, contact me here and I will put you in touch with a local loan officer I have vetted myself.