Your home is often the most significant purchase you’ll ever make, and we’re excited to help you make the dream of homeownership come true. It takes planning, saving for a down payment, and an understanding of what you can afford.
How much home can you afford?
First, review your budget and finances, and be realistic. From the lender’s point of view, what you can afford and the size of the mortgage you can qualify for will depend on your:
• Credit History—With good credit, you are likely to qualify for a mortgage and potentially get a lower interest rate on your mortgage, which will save you thousands of dollars over the life of the loan.
• Debt-to-Income Ratio—When you apply for a mortgage, lenders compare your income to your current loans and other debts to see how much you can afford to spend each month on mortgage payments. Figure out how much money goes towards debts every month compared to your gross monthly income. For example, if you pay $400 a month on school loans and another $300 a month for an auto loan and $200 a month for the rest of your debts, your monthly debt payments are $900. If your gross monthly income is $2,500, then your debt-to-income ratio is 36%.
• Down Payment—The larger your down payment, the less you need to borrow. The down payment is usually expressed as a percentage of the sale price or appraised value, whichever is lower. While 20% of the sale price is common as a down payment, some mortgage products require much less.
Mortgage Solutions
