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Budgeting for a Home

The "right time" to buy a home is different for everyone, but budget is often a leading factor. I'm an expert in helping you find the right mortgage to fit your own personal budget. I have the experience to lead you through the process and give you confidence to make the best decision for your future.

Can You Qualify for a Mortgage?

The first question I 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 want to estimate 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.