How Much House Can You Afford?

This handy widget can give you a rough idea of what you might be able to qualify for. This is an estimate! You’ll need to reach out to a lender to to confirm. Also the monthly payment needs to make sense for your budget above all else.


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Income to Debt Ratio Will Dictate How Much You Can Borrow.

To calculate your debt-to-income ratio, you add up all your monthly debt payments like student loans, credit card payments, car loan, etc., and then divide them by your pre-tax monthly income. If you pay rent on a place that you’ll be leaving when you buy, do not include it as a debt.

For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2,000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6,000, then your debt-to-income ratio is 33 percent. ($2,000 is 33% of $6,000.) Source

Generally, 43% is the highest DTI ratio a borrower can have and still get qualified for a mortgage. Ideally, lenders prefer a debt-to-income ratio lower than 36%, with no more than 28% of that debt going towards servicing a mortgage or rent payment. The maximum DTI ratio varies from lender to lender, so it does make sense to shop around.

The widget above uses a 40% DTI to calculate.

This Home Loan Toolkit from the Consumer Financial Protection Bureau may be helpful as well.

Does this sounds doable? Go speak with one or a few of my recommended lenders to learn more about this process and get a pre-approval letter, and then reach out to me to schedule a consult.