Rules for determining how much house you can afford.
Are you searching for a first home, sizing up or down, or even a vacation home on Hilton Head Island or in Bluffton? If so, you’re probably wondering where to start and exactly how much house or villa you can afford. Chances are you have met with a mortgage broker and already have this information provided for you. If not, we have a few tips and a great starting point for determining just how much you can afford.
Mortgage lenders use income size and stability, credit score, down payment size and other factors when approving a loan. Each lender will use slightly different ratios but most are within the same range.
Here are a few good tips:
Mortgage Payment: A general rule of thumb is your monthly mortgage payment should not exceed 28% of your gross monthly income.
Total Housing Payment: Your housing payment (including mortgage, insurance, property taxes, association fees and private mortgage insurance) should not exceed 32% of your gross monthly income.
Monthly Debt: Your debt payments, including housing payment, should not exceed 40% of your gross monthly income.
Contact us for more information about financing your next real estate purchase.
This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.