How Much House Can I Afford?
If the term mortgage has crossed your mind recently and you’re in the market to purchase a new home, you’ve probably asked yourself, “How much house can I afford”?
This is a very important question all prospective homeowners should know the answer to well before they begin looking at real estate, whether it’s a single-family home, condo, or townhouse.
Knowing how much mortgage you can afford will allow you to narrow your home search so you can save time and be more productive. And hopefully successful in finding your dream home
In fact, if you don’t already have a mortgage pre approval in hand, which essentially details how much house you can afford, most real estate agents won’t take you seriously. And may not even take you out to see listings. Why? Because home sellers won’t want to waste their time with a prospective buyer that isn’t actually qualified in a given price range.
How Much Mortgage Can I Afford On…50k, 100k, 200k
- You can’t just plug in your income and determine affordability
- You have to consider your monthly expenses
- Your down payment
- Current mortgage rates
- And local property taxes and homeowners insurance
While the question is often framed as “how much house,” perhaps it’s better to ask “how much mortgage can I afford” instead. I say that because you could potentially afford to buy all types of homes depending on the size of the down payment.
That being said, it seems a lot of folks want to know what mortgage they can afford based on a certain salary such as $50,000 or $100,000.
Again, it’s not that simple, nothing ever is in the mortgage world. We can’t just look at your income in a vacuum to determine how much you can borrow for a mortgage.
Instead, we need to factor in your monthly liabilities (expenses) such as student loans, credit cards, any current mortgage you plan to keep, and the proposed housing payment (including homeowners insurance and property tax).
Unfortunately, we don’t all have the same monthly expenses or the same annual property tax bill. These things can vary considerably.
For example, if someone makes $100,000 a year in salary, but has sky-high monthly expenses including a pricey Range Rover lease that sets them back $2,000 a month, it may not matter that they’re in the six-figure club.
Their frugal friend who makes a bit less, say only $75,000 per year, but drives a Prius they own outright with no monthly payments will have roughly the same amount of money available for an eventual monthly mortgage payment.
A legitimate affordability calculator will take all these important items into account to ensure you’re actually qualified at a certain purchase price.
Contact me, Angie Childs today for all your mortgage needs!
Chat with Lucy, my 24/7 assistant for any questions you might have.
Other content you’d like
From the community:
- Refinancing Your Home: What Is It and When Should You Do It?
- Is Buying a Fixer-Upper Home Worth the Investment?
- A Rundown on the 2021 Housing Market
- Foreclosure Moratorium Expiring September 30, 2021
- Everything You Need to Know About Down Payments When Purchasing a Home
Start chatting with Lucy, your 24/7 assistant and we will get working on letting you know your requirements for approval.
