There are many factors that go into determining how much home you can afford.
To qualify you for a mortgage, a lender considers details such as your income, debt ratios, and credit standing. Different types of lenders (prime and alternative) may use differing qualifiers for your situation.
What you can afford ultimately comes down to
1Your financial situation
2Your monthly payment
The monthly mortgage payment amount you can (comfortably) handle
3The stress test
The federal mortgage stress test, which can impact your home shopping amount
Use our Mortgage Payment Calculator to see your initial numbers — it shows you how the home price, size of down payment, and mortgage rate can impact your payment amount.
Then, consider your monthly expenses and how home costs might fit in. Buying a home shouldn’t leave you ‘house poor’ — unable to afford a vacation or put money aside.
Let’s continue with a look into how your financial standing factors into your first-home dreams.