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How Much Can you Afford? The quick and easy answer is to calculate the following guideline:
Your Monthly Income (before taxes) x 33%
This represents you House Payment budget
For example $4000 x .33 = $1320 per month (for principal, interest, taxes and insurance)
Next, multiply your income x 38%. This represents your Total Debt Payment Budget
For example, $4000 x .38 = $1520 per month to spend on all loan payments including your home.
($1520--1320 = $200 for credit card or other payments)
The Most Important Consideration is to plan a budget based on a monthly house payment you are comfortable with.
"Can I qualify for more than the basic payment I calculated above?" In most cases, the answer is YES. Many factors are taken into consideration when determining a qualifying payment. Additional factors include:
Size of the Down Payment
Quality of your credit rating
Previous Home owner ship
Other income sources such as a bonus
When you are ready to be prequalified, give me ac call or send me an email to schedule a free consultation.
We will go through the complete pre-qualification process which will take approximately 20-minutes. Please have your income (recent pay stubs) handy, list of your debts, and information on the cash you have or "will have" for any down payment and closing costs.
Two Important points to remember:
You reduce the chance of complications and lower the stress involved with financing a home if you PLAN AHEAD ...get your ducks in a row. Unless you are relocating on a fast track, it's best to start your financial planning early--at least 90-days before ( 4-5 months if you have concerns about qualifying)
You can purchase a home under many "zero" down payment loan programs. For clients who purchase homes with no down payment, I always recommend sending an extra $50 or more each month--effectively making the downpayment as you go. When you are ready to move again or refinance, you'll have Equity available to capture the best loan programs available.
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