How Much Home Can You Afford? MD, DC and VA

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Buying a Home In Maryland, DC
or Virginia
How Much Home Can You Afford?
An Easy Guide. . .

How much home can you afford?

Most buyers are often clue-less about the financial aspects of buying a home, and if you are considering taking advantage of the present Real Estate situation, you may have many questions unanswered. How much can I afford? Do I need a large down payment? What are my payments going to be? What interest rate? What is interest rates?

To begin with, if you are a first time home buyer, your home price range will be determined by your income, credit history, the cash you have for a down payment & closing costs.

Your debt also plays a major role. How much you owe vs how much you make will determine if you are credit worthy or a credit "taker". 

After you make an application with a loan officer, they will pull your credit and the amount how much you earn will be also compared to how much you owe. . this will determine how much the bank $$$ allows you to borrow.

Complicated enough?

Let's try this way. .remember this is for GROSS INCOME 

The financial rule of thumb is as follows.. . . your total monthly debt, which will include your monthly mortgage, should’t be more than about 35 to 38% percent of your gross monthly income. 

Most experts agree with the above ratios and you more likely will not be able to get a loan. .if you are hovering around the  40% plus ratio.

Easy Math. . If you make GROSS $1,000 per month. 

Your monthly total debt should not be no more than $380 per month.. .$400 tops 

With just $380 per month. .your house will be worth somewhere around below $50,000 at today's rates.

To live in the Washington DC area including Maryland and Virginia . .a $50,000 house  is like the loch ness monster. . . Some claim they have seen it. .but I missed. From time to time a picture will emerge of a $50,000 home. .usually is in black & white and kind of fuzzy.

Going back to afford ability, naturally every situation is different, and each lender has different rules about working with buyers. This will control exactly how much a lender is willing to lend to you.  

Your best bet is to surround yourself with professionals and start by finding out how much home you can afford and then. . . .ONLY THEN..start looking for your dream house.

But please don't ask me to show you $50,000 homes walking distance to the White House or Georgetown. . unless you supply the bodyguard.

Find Homes For Sale in Maryland, DC and Virginia Here

Fernando Herboso
Herboso & Associates
"Working with us it's not an OBLIGATION. .it's a choice"
Phone: (301) 881-8900
Cell: (240)426-5754
Click to Talk to Fernando Herboso!

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Chris Oliver
Century 21, Preferred Properties - Reynolds Plantation, GA

Good info. I always send my first timers to a good reputable lender first. I am amazed by the unrealistic expectations some people have. Once they have a good number to work with it is much easier to show them the type of homes they can afford and adjust those expectations.

Feb 08, 2009 09:08 AM #1
BJ Matson
The Choice Group - Olney, MD

Fernando, just found your blog post here,

Pretty cool.. you can set Google Alerts so you are emailed when something specific is blogged.  For this one, i chose 'maryland real estate'.  

Feb 08, 2009 10:58 AM #2
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Fernando Herboso - Broker for Maxus Realty Group

301-246-0001 Serving Maryland, DC and Northern VA
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