Erik Sandstrom
Senior Loan Originator
4747 Executive Drive Suite 520,
San Diego, CA 92121
NMLS# 805941
Mobile: 619-379-8999
Direct: 858-764-7850
Fax: 866-638-8030

Budgeting for a home

The "right time" to buy a home is different for everyone, but budget is often a leading factor. At PrimeLending, we’re experts in helping you find the right mortgage to fit your own personal budget. We have tools and lending professionals dedicated to leading you through the process to make sure you can make the best decisions for your future.

Can You Qualify for a Mortgage?

The first question we can help you answer is if you qualify for a mortgage. One of the key factors in determining this is your debt-to-income ratio. For example, if a loan program uses a 28/36 qualifying ratio, this means you are allowed to spend no more than 28% of your gross (pre-tax) income on monthly mortgage payments and no more than 36% on total debt. Total debt includes car and school loans, credit cards, child support and alimony. So, if you earn $60,000 per year, your monthly gross income is $5,000. Under the 28/36 guidelines, your maximum monthly mortgage payment should not exceed $1,400 while your total monthly debt should not exceed $1,800.

How Much Home Can You Afford?

Next, you’ll need to calculate how much you can afford. For example, how much of a down payment are you prepared to make? Commonly paid in cash, the down payment is based on a percentage of the home’s selling price and is due at closing. Making a down payment of 20% or more can save you money and enable you to avoid the cost of mortgage insurance. If you are unable to make a 20% down payment, many other affordable mortgage programs exist.