How do I find out how much house I can actually afford?
February 6, 2008 · Print This Article
ZarahzMA asked:
It’s just my 8 month old daughter and I. I’m looking for a 2-3 bedroom 1-1/5 bathroom house in my area. I do not want to be living beyond my means. I will be a first time buyer so I’m curious about different first time buyer programs. Are there any good websites with all of this info??
It’s just my 8 month old daughter and I. I’m looking for a 2-3 bedroom 1-1/5 bathroom house in my area. I do not want to be living beyond my means. I will be a first time buyer so I’m curious about different first time buyer programs. Are there any good websites with all of this info??
Thanx in advance for your info.
All of your answers were so helpful. Thanx very much!!!
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Josh Dunaway has been a certfied Realtor in the suburban Chicagoland area for over 20 years. Aside from starting his own real estate company, he also owns a mortgage company as well.
You should meet with a realtor. They can help you with all of this. They don’t want to sell you a home that you cannot afford. Also, look at banking websites because they have calculators you can use. You need to figure out how much of a down payment you can give. What is the real estate market out there like? Get a housing listings paper to see what properties are listed and selling for. You should get prequalified for a mortgage. You could shop around for a mortgage. Be very inquisitive. If there is something you don’t understand then ask questions until you get it. Don’t just take them at their word. You cannot trust any salespeople, especially mortgage lenders. A lot of them are crooks, unfortunately. Be inquisitive. That’s your best defense. Ask for the details. (Know everything there is to know about your loan options.) Read the entire contract. Ask questions about anything that you don’t understand. Check what answer you receive to the letter of the document. Are there any discrepancies? There could be because some of the mortgage lenders will say anything to close the deal. So beware. Don’t be intimidated. Buying a home is difficult and a big decision. Don’t be rushed into it.
Sit down and write down your monthly income, and then honestly list all your monthly expenses, including those paid yearly or semi-annually (such as insurance). Do not include your current rent payment. Now, how much is left over each month? This is what you can realistically afford, unless you expect your income to increase.
Typically your mortgage expense should be 28-33% of your monthly income. Generally you would multiply your annual income by 3 to see the maximum that you would qualify for.
However, with the advent of more loan programs, you’ll likely qualify for more. I was recently told by a loan officer to multiply my income by 5 to see what I can afford.
Your first step would be to visit your local credit union or bank to get pre-qualified for a loan.
Alternatively, you could contact a local loan officer who would also be able to help.
HTH!
That depends on where you live. The first thing that I would do is go to the lending institute where you bank and talk to a mortgage broker, I always suggest to start there because you have a business relationship with them already. Then shop around from there, talk to a Realtor and they should be able to give you a list of lenders to check with in your area. I would be very cautious about looking for a lender on-line. I agree shop around until you find someone with a good rate but also someone who you feel comfortable with that will take the time to explain things to you. Once you do that talk to them and they will be about to give you an idea of what you can afford. And it is nice to have a letter of pre-approval when starting to look for houses not only for you but some Realtors require it. Then you don’t go and fall in love with a house you can’t afford.
3 times income. A creative loan officer could steer you through the process and maybe get you more house with a creative loan. I suggest Hometown Banc Corp. My mom used them. They may be your best opportunity for someone to say yes. If your credit does not measure up, they don’t simply “forget to call you back.” They help you get into a credit repair program you can afford regardless of income. Check out the free evaluation form at and a Hometown loan officer will contact you .