Before you start searching for your dream home, you first need to determine a price range you can afford. According to the Federal Housing Administration (FHA), depending on the consumer’s current debt ratio, most people can typically afford to pay 31 percent of their gross monthly income for mortgage payments. For example, if you earn $50,000 annually, then your monthly income is about $4,167. Thirty-one percent of that is $1,292.
There are several online tools to calculate a monthly mortgage you can afford using factors such as your current monthly expenses, down payment and the interest rate. You can also work with a lender to get pre-qualified for a loan. This estimate will help you gauge how much money you may be able to borrow and the monthly mortgage payments.
However, the amount you are able to afford for a home loan should not be your only consideration for determining your price range. With homeownership come other housing expenses. Utilities, Taxes, Association Dues, Maintenance, Insurance, Remodeling/Upgrades
By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.
By determining all the costs associated with homeownership, you can go into your home search with a reasonable price range that will allow you stay within your budget.
By Mary Lane Sloan
Buyers Agent
The Andrea Reynolds Team
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