Before you start browsing listings, it helps to know how much home you can realistically afford. A lot of buyers either overestimate or underestimate their purchasing power, and both can cause problems. Here’s how to get a clear picture of your budget.
Start With Your Gross Monthly Income
Lenders typically want your total monthly debt payments, including your new mortgage, to stay below 43% to 50% of your gross monthly income, depending on the loan type. This is your debt-to-income ratio.
Factor in All Housing Costs
Your mortgage payment is just one piece of the puzzle. When calculating what you can afford, include principal and interest, property taxes, homeowner’s insurance, HOA fees if applicable, and private mortgage insurance if your down payment is less than 20%.
Don’t Forget Upfront Costs
In addition to your down payment, you’ll need cash for closing costs, which typically run 2% to 5% of the loan amount. Keep an emergency fund after closing so you’re not stretched thin if something breaks in the first few months.
The Best Way to Know for Sure
Online calculators give rough estimates, but they don’t account for your credit score, debt profile, or the specific loan programs you qualify for. A free mortgage consultation with a local broker gives you an accurate number based on your real financial situation.
Jesse Griffith will run the real numbers with you and show you exactly what you qualify for. Call or text 321-501-9579 for your free consultation.