How Much of a Mortgage Can I Afford?

The mortgage payment; it's a big payment. It's an important payment. When you ask yourself, How much of a mortgage can I afford? you might be somewhat clueless. Trying to figure out what you can afford when looking to purchase new home can be a real waste of time without the assistance of a mortgage professional. The amount of money you think you can afford for a new home might not be what you qualify for. You could qualify for more or less. If you are only looking at the main qualifying criteria in determining how much you can afford for a housing payment, you need to look at 2 things. 1.) Gross Monthly Income and 2.) Debt Obligations.

Your gross monthly income is compared against what your new housing payment would be, plus your current monthly debt obligations. The magical number that compares income and debt payments is referred to as the debt to income ratio. Read more about the debt to income ratio in the Mortgage Resources section.

You should also think about what kind of monthly payment you are comfortable with and not just what you can qualify for. If you currently rent a home for $800.00 per month and the payment on the house you want to buy would come out to be about $1200 a month, you'd better have that extra $400.00 per month available in your budget to pay for the new mortgage. Even if you are pre-approved for a $1200.00 per month mortgage payment, consider how that payment might affect your lifestyle and spending habits. If it means that paying the bills and juggling a new budget will be tight, perhaps look at a more affordable house.

The allowable debt to income ratios also vary among different mortgage programs. Talk to a BeatMyBroker.com mortgage professional to find out more information.