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How Much Home Can You Buy? Our Mortgage Calculator May Surprise You!

The iServe Blog


If you're considering buying a home, have you discovered how much home you may be able to afford? With the number of different programs available, the answer may surprise you. What will your payments be? How expensive of a home can you qualify for? Though these are some tough questions on the road to home ownership, they're important in determining your eligibility for a mortgage. Here's some information about how these calculations work.

How Much Home Can You Buy? Our Mortgage Calculator May Surprise You!

How much is the home really worth?

The first thing you should remember is that the asking price and the sale price of the home you're considering may very well not be the same figure at all. A home that sold for half a million before the housing market crash may now sell for only half of that. Though you shouldn't approach the seller of a mansion on a hill with a ridiculously low figure, making a lower offer to see if it will be accepted may be a great way to get more home than you would expect. However, it's a much better idea to know where your prospects lie prior to making that offer.

How much home can you qualify for?

Generally speaking, you can qualify for between two and two and a half times your annual income, provided that everything else is in good order. However, if your credit isn't in good condition, you may not qualify for as much or may need to pay a higher down payment to meet the mortgage lender’s requirements. There are some programs that provide loan guarantees or insurance, such as FHA and VA loans, which assist in allowing a mortgage lender to offer more favorable terms to an applicant and can sometimes help in these situations as well.

How much home can you afford?

There are two ratios that are often considered in this situation. Front-end ratio looks at the mortgage payment as a portion of your income. In general, this is between 28-30 percent of your gross income, though it can be higher if you have exceptional credit or little to no debt. The back-end ratio looks at your debt versus your gross income, which shouldn't exceed 36 percent overall.

Many prospective buyers either think they can afford much more or much less home than they may actually be able to afford. I'd like to introduce the mortgage calculator as a tool for keeping expectations realistic while encouraging a little dreaming, and still mention the options that allow the buyer to afford a more expensive home, such as saving because of a larger down payment.

Though determining how much home you can afford can be a complicated process, our mortgage calculators can help you figure it out with a minimum of effort. From determining what income you need to qualify for a particular home to figuring out how much your total payments will be, these tools help you get the process started. But what happens next? Contact one of our experienced mortgage loan originators today for more information.

 

 

iServe Residential Lending, LLC is not affiliated with or acting on behalf of or at the direction of the FHA, VA or the Federal Government.

Programs, terms and guidelines subject to change without notice. Not all applicants may qualify. All loans subject to underwriter and investor approval. Arizona Mortgage Banker License BK-0920658; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License 413-0646; Colorado - Regulated by the Division of Real Estate; Georgia Residential Mortgage Licensee License #19613; Licensed by the New Jersey Department of Banking and Insurance License # 512567; Licensed Mortgage Banker—New York State Department of Financial Services License # B501014; Oregon Mortgage Lending License ML-3238; Licensed by the Virginia State Corporation Commission (Lender License MC-3220),  NMLS # 2914 (www.nmlsconsumeraccess.org). iServe Residential Lending, LLC, 15015 Avenue of Science Suite 250, San Diego, CA 92128 Phone: (858) 486-4169