{"id":333,"date":"2021-08-17T05:37:12","date_gmt":"2021-08-17T05:37:12","guid":{"rendered":"https:\/\/xlnc.info\/instamortgage\/?p=333"},"modified":"2023-11-09T19:16:26","modified_gmt":"2023-11-09T19:16:26","slug":"how-much-mortgage-can-i-afford","status":"publish","type":"post","link":"https:\/\/xlnc.info\/instamortgage\/how-much-mortgage-can-i-afford\/","title":{"rendered":"How much Mortgage can I Afford?"},"content":{"rendered":"
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\"House-Dollar\"<\/div>\n<\/div>\n

How much Mortgage can I Afford? How much mortgage money can I qualify to borrow?<\/strong><\/p>\n

These are typically the number one questions mortgage professionals are asked by new clients.<\/p>\n

Of critical importance when considering mortgage financing: There is sometimes a difference between what a client ***can*** borrow and what they ***should*** borrow. In other words, what makes for a comfortable long-term mortgage payment?<\/p>\n

The Quick Answer:<\/strong><\/p>\n

If we’re simply considering the financial math, lenders will calculate<\/a><\/strong> your Debt-to-Income Ratio and generally allow for 28-31% of your gross income to be used for the new house payment<\/a><\/strong> with up to 43% of your gross income to be used for all consumer related debts combined.<\/p>\n

Sample Mortgage Scenario:<\/strong><\/p>\n

Let’s use a gross monthly income of $3000 and a qualifying factor of 30% Debt-to-Income Ratio<\/a><\/strong>:<\/p>\n

$3000 multiplied by .3 (30%) = $900 max monthly mortgage payment<\/p>\n

This means that your Bay Area mortgage payment (Principal, Interest, Taxes, Hazard Insurance) cannot exceed $900 a month.<\/p>\n

“Ballparking” a Qualifying Loan Amount:<\/strong><\/p>\n

Simple step: We use a safe average of $7 per month in payment for every $1000 in purchase price so…<\/p>\n

Step 1) $900 a month divided by $7 = $128.50<\/p>\n

Step 2) $128.50 multiplied by 1000 = $128,500 loan amount.<\/p>\n

Remember, these are average ratios and guidelines set by most lenders for common mortgage programs.<\/p>\n

Keep in mind, while most consumer debts are listed on a credit report, there are some additional monthly liabilities that may contribute to the overall qualifying percentages as well.<\/p>\n

Regardless of how your personal income and credit scenarios factor in, it is important to consider your overall budget when trying to determine how much of a mortgage<\/a><\/strong> you should qualify for.<\/p>\n

Other items to consider in your monthly budget:<\/strong><\/p>\n

1. Confirm all debts are taken into account
\n2. Any private notes or family loans
\n3. Short-term expenses – medical, auto repairs, travel, emergencies
\n4. Plan on additional expenses for the home such as water, electric, maintenance, etc…
\n5. Keep a cushion for savings and financial planning<\/p>\n

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