Question Details

Db, Home Buyer in 11367

How can I calculate how much money I can pay for a house?

Asked by Db, 11367 Wed Dec 26, 2007

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Of course, everyone and their brother has a mortgage calculator on their website and you should always talk with a loan officer to examine any unusual circumstances that may affect your ability to make your mortgage payments.

But the general rule of thumb is that you should pay no more than 35% of your gross income towards your home. So if you earn $30K per year - your annual mortgage should be no more than $10.5K per year or $875.00 per month.
1 vote Thank Flag Link Thu Dec 27, 2007
Hi Db:

I agree with Cindy, you should talk to a mortgage broker to find out how much house you can afford. The reason is because this is not straight forward - how much monthly payment you can afford to pay depends a lot on the amount you are borrowing (not in order of importance): :

How much down payment / closing cost you have, points you are willing to pay, the credit rating you have (which affects the interest rate), property tax, insurance, other debts you might have (lenders will be interested in finding out your debt to income ratio), the kind of loan you are getting (adjustable rate, fixed rate, interest only,, etc), your income potential, how long you have been on the job, whether you are a salaried employee or not, etc.

Each answer will have some effect on how much money you can borrow from the lender, and thus how much money you can pay for a house.

A good, reputable mortgage broker will sit down with you and go through the numbers and difference options you might have. They will also give you suggestions on what to work on to improve your options.

Your friend, family or Realtor can recommend good mortgage brokers to you to get started.

Good Luck!
0 votes Thank Flag Link Wed Dec 26, 2007
Sylvia Barry,…, Real Estate Pro in Marin, CA
Your best bet is to talk to a lender and get pre-qualified for a loan. They'll take into account your debt to income ratio and explain diffrent options available to you. They'll do this at no charge - in hopes, of course, that you will give them your business when you are ready to buy a home. Good luck - it's a great time to buy!
Web Reference:
0 votes Thank Flag Link Wed Dec 26, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
0 votes Thank Flag Link Wed Dec 26, 2007
Web Reference:
0 votes Thank Flag Link Wed Dec 26, 2007
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