How Much House Can I Afford
Knowing how much of a house payment you qualify for before you shop for a house will make your purchase go much smoother and can save you a lot of heartaches.
You don't want to find the perfect house then have a lender say you can't qualify for it.
There are a lot of factors involved when you qualify for a home mortgage. Each lender has different guidelines and there are a multitude of different loan programs.
Several other factors like down payment, loan amount and credit score will also make a difference.
However, there are some general guidelines that will help you determine how much of a mortgage you will qualify for. These are only estimates but will give you a general idea of how much of a house payment you can qualify for.
1. Your mortgage payment, taxes and home owners insurance and any other fixed housing expense should be between 25% and 28% of your total gross (before taxes) monthly household income.
2. Your monthly housing costs (the total figure above) plus any other long term debt (monthly expenses extending longer than 11 months) such as car or boat loans, credit cards, or installment loans should not exceed more than 40% of your gross (before taxes) monthly household income.
These figures can go higher if you have very good credit because a good credit score means you are a better risk to a lender.
A good credit score to a lender usually starts at 680 and above. It will vary between lenders but a 680 score and above is a good basic guideline for getting the very best interest rates and terms.
You may be asking how can you find out what your credit score is before you talk to a lender? This is a good idea but keep in mind you will have to pay for the report. A lender will usually use Experian, Trans Union and Equifax credit services to get an average credit score for you.
You have probably heard that checking your credit will bring down your score. But checking your own credit report and score is counted as a "soft inquiry" and doesn't harm your credit score at all. Only "hard inquiries" from a lender or creditor, made when you apply for credit, will bring your credit score down a few points.
If you would like a free copy of your credit report we recommend this source free credit report.
The best way to know exactly how much you will qualify for is talk with a mortgage professional. This is what they are trained to do and they can give you a more accurate figure so there are no surprises when you go to make an offer. After all, this is your dream and it should be a pleasant experience not a nightmare.
About the Author
Gary Gresham is a mortgage loan officer and the webmaster for
1 Stop Shopping Online.com. He offers you purchase, refinance, debt consolidation or home equity loans at competitive rates through this online link. Home Loans.
If you want more information about credit, debt elimination programs and credit repair go to: Credit Repair Facts.com
You don't want to find the perfect house then have a lender say you can't qualify for it.
There are a lot of factors involved when you qualify for a home mortgage. Each lender has different guidelines and there are a multitude of different loan programs.
Several other factors like down payment, loan amount and credit score will also make a difference.
However, there are some general guidelines that will help you determine how much of a mortgage you will qualify for. These are only estimates but will give you a general idea of how much of a house payment you can qualify for.
1. Your mortgage payment, taxes and home owners insurance and any other fixed housing expense should be between 25% and 28% of your total gross (before taxes) monthly household income.
2. Your monthly housing costs (the total figure above) plus any other long term debt (monthly expenses extending longer than 11 months) such as car or boat loans, credit cards, or installment loans should not exceed more than 40% of your gross (before taxes) monthly household income.
These figures can go higher if you have very good credit because a good credit score means you are a better risk to a lender.
A good credit score to a lender usually starts at 680 and above. It will vary between lenders but a 680 score and above is a good basic guideline for getting the very best interest rates and terms.
You may be asking how can you find out what your credit score is before you talk to a lender? This is a good idea but keep in mind you will have to pay for the report. A lender will usually use Experian, Trans Union and Equifax credit services to get an average credit score for you.
You have probably heard that checking your credit will bring down your score. But checking your own credit report and score is counted as a "soft inquiry" and doesn't harm your credit score at all. Only "hard inquiries" from a lender or creditor, made when you apply for credit, will bring your credit score down a few points.
If you would like a free copy of your credit report we recommend this source free credit report.
The best way to know exactly how much you will qualify for is talk with a mortgage professional. This is what they are trained to do and they can give you a more accurate figure so there are no surprises when you go to make an offer. After all, this is your dream and it should be a pleasant experience not a nightmare.
About the Author
Gary Gresham is a mortgage loan officer and the webmaster for
1 Stop Shopping Online.com. He offers you purchase, refinance, debt consolidation or home equity loans at competitive rates through this online link. Home Loans.
If you want more information about credit, debt elimination programs and credit repair go to: Credit Repair Facts.com
posted by Gary at 2:05 PM
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