Determining How Much Payment You Can Afford + Factors that Affect Affordability <\/p>\n\n\n\n
Buying a home is one of the biggest purchases someone will make in their entire life. Because homebuying is such a big purchase, it\u2019s important to reflect back on your own finances and determine whether or not you should continue moving forward with the process. To start off, you can do some quick calculations that will give you more of an idea of how much you can truly afford based on your income. It\u2019s recommended by financial advisors to not spend any more than 25% to 28% on a mortgage payment, so you can add up your total household income and multiply it by .28.<\/p>\n\n\n\n
For example, if your total income each month is $4,000, you can multiply that number by .28 which will get you to $1,120. Besides income, there are a couple other factors that go into deciding how much mortgage you can afford. These factors include:<\/p>\n\n\n\n
Credit score is one of the major components that can influence your chance of qualifying for a mortgage loan. A better credit score will result in lower interest rates, so it\u2019s a good idea to work on improving your score before speaking with a lender about a loan. You can check your credit every year completely free, by contacting one of the national credit reporting agencies that include Experian<\/a>, Equifax<\/a>, and TransUnion<\/a>.<\/p>\n\n\n\n