Home Buying in West Town>Question Details

Trulia Chica…, Other/Just Looking in Chicago, IL

How do you determine how big of a monthly payment you can handle (taking into account the principal and interest every month)?

Asked by Trulia Chicago, Chicago, IL Wed May 15, 2013

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To arrive at an "affordable" home price follow the guidelines of most lenders. Allow a total debt-to-income ratio of no more than 36 percent. And assume a housing payment-to-income ratio of 28% for our conservative estimate, and 33 percent for the aggressive one. Before buying, note you should also factor in other savings needs, including retirement and college.

During this time the entire time do not open any new lines of credit whatsoever until after you have closed on your new home.

Referenced from CNNMoney
1 vote Thank Flag Link Thu May 16, 2013
The best way to do that is to reach out to a lender and see about getting pre-qualified for a home loan. You would complete the application and the lender of your choice would be able to run the numbers for you. As a lender we have to adhere to specific guidelines in regards to your Debt to Income Ratio. The simplest way to put it is that we take your monthly gross income and divide it by your monthly housing including Principal, Interest, Taxes, Insurance, PMI, and Condo Assessment (if applicable) for the front end ratio and total of all other debt (car payments, student loans, credit cards, etc) for your back end ratio. Standard QRM guidelines are 28%/36% for but we normally go up to 45% for total debt. I hope that helps you figure out what you are looking for. If you have any questions please feel free to contact me.
Thanks,
Jim Pontious
Mortgage Banker
PHH Home Loans
jim.pontious@phhoneline.com
773-704-7299
0 votes Thank Flag Link Thu May 16, 2013
Reach out to a lender. Let them crunch the numbers for you.
0 votes Thank Flag Link Thu May 16, 2013
Crunch all the expenses you have and give it some careful thought, planning for future expenses and savings.
I would suggest 30% or less of your total gross income each month for a house payment with P and I, taxes, insurance, association fees and mortgage insurance..
0 votes Thank Flag Link Thu May 16, 2013
Speak with a lender - you should be able to 49% of you montly income
0 votes Thank Flag Link Wed May 15, 2013
Speak with a lender and see what you can afford. Then figure out yourself if its something you can swing and be comfortable with it.
0 votes Thank Flag Link Wed May 15, 2013
Speak to a Lender

or

take PITI - Principal, Interest, Taxes and Insurance and Divide it by your Gross Income.

Try to have this number be < 33%
0 votes Thank Flag Link Wed May 15, 2013
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