It’s crucial to figure out just how much you can comfortably afford to spend when you’re ready to own a home.
Here are (3) important factors to consider when determining this cost:
Down Payment Amount - A larger upfront payment on your loan will reduce the overall amount you will finance. Some loan programs require a down payment based on a specific percentage of the total loan amount. Qualified borrows may benefit from available programs that make them eligible for low and no down payment loans.
Total Monthly Mortgage Payment - It is recommended that the total monthly mortgage payment amount should not exceed 28% of your gross (pre-tax) monthly income. For example, if you make $4,000 (pre-tax) per month, your monthly mortgage payment should not exceed $1,120.00 (28% of $4,000). Although there are mortgage payment calculators available to help factor in other costs, such as interest rate, property taxes, and mortgage insurance, Premier Mortgage Consultants can provide you with the most accurate payment estimate.
Your Annual Income - Generally, most prospective homeowners can afford to finance a property that costs between two and two-and-a-half times their gross annual income. For example, a person earning $100,000 per year can afford a mortgage of $200,000 to $250,000.
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