How Much Can I Afford?

Early in the process,  Get Pre-Qualified for a Mortgage Loan.

  • Enables you to move swiftly when you find the right home, especially when there are other interested buyers.
  • Indicates to the seller that you are serious and can afford to buy the property. A pre-approval is a simple calculation done by a mortgage lender that tells you the amount you’ll be able to finance through a loan and what your monthly payment will be.

The price you can afford to pay for a home will depend on:

A review of:

  • Gross income
  • The funds you have available for the down payment, closing costs and cash reserves required by the lender
  • Debt
  • Credit history
  • The type of mortgage you select
  • Current interest rates

 Expense-to-income ratio

Another figure that lenders use to evaluate how much you can afford is the housing expense-to-income ratio.

Determined by calculating your projected monthly housing expense, which consists of the principal and interest payment, property tax payments and insurance premiums on your new home loan (also known as PITI).  Each buyer is unique, and a mortgage professional can help you find out just what you can afford. Your income and debts will typically play the biggest roles in determining your price range.