“How Much Mortgage Can I Afford?”
Determining how much mortgage you can qualify for is an important determination when beginning the process of shopping for a new home or property.
As you’ll see in the video, the lenders consider your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses.
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Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support.
According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income.
Lenders also consider cash available for down payment and closing costs credit history and the rest of your financial picture when determining your maximum loan amount.
Interest rates, and the type of loan (30 year, 15 year, 7 year ARM, etc.) can affect your monthly payment, and therefore your debt to income ratio.
Also, having sufficient savings and reserves, and paying off consumer debt prior to buying a home are all good strategies to enhance the prospects of being approved for the best possible mortgage.
At First Title & Abstract, Inc., our staff in the Marco Island and Naples offices can assist you in finding a qualified mortgage professional in your area to help you begin the process of qualifying for a mortgage.
Knowing what you can afford is smart!
Please don’t hesitate to contact us for a referral to help you begin the process!