"I want to buy a house but I'm not sure how much mortgage can I afford"
Your lender decides what you can borrow, but you decide what you can afford.
Lenders are careful, but they make qualification decisions based on averages and formulas.
They won't necessarily understand the degree of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money - from furnishings, to landscaping, to repairs.
Historically, banks use a ratio called 28/36 to decide how much money potential borrowers can qualify for with a loan.
An approved housing payment could not be more than 28 percent of the buyer's gross monthly income, and his or her total debt load - including car payments, student loans, and credit card payments - could not be more than 36 percent.
NOTE: In Canada, lenders apply similar formulas to determine how much a buyer can afford. The Gross Debt Service ratio, or GDS, is not to exceed 32 percent of the buyer's gross monthly income, and the Total Debt Service ratio, or TDS, is not to exceed 40 percent of the buyer's total debt load.
As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent.
No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.
Deciding how much home you can afford should involve some careful attention to how your financial profile will change in the upcoming years.
In the long run, your own peace of mind and security will matter most!
For more information on budgeting for a home, please contact home buyer specialist, Rachel Alosky at 828-737-1608 or via email at TeamStreppa@gmail.com.
About The Streppa Team | RealtyAsheville.com: Homes for Sale
As a native of Asheville, NC, Skye has an unparalleled understanding of the local market and area. Honesty, integrity and a hardworking spirit are the very tenets that ensure Skye gets you the very best deal in every real estate transaction. That very business model has led to Skye Streppa being a multi-million dollar producer for Keller Williams for nearly 10 years running.
Starview Heights is a private gated community in the heart of Western
"When I returned from California in 2012, one of the primary goals I established was to buy a house. What has been a dream for 4 years finally became a reality today when I closed on a house which not only fits my budget but also suits my personality and idiosyncrasies perfectly. It's essentially a cabin deep in the woods with a creek running thru the yard. lol However, I am not embellishing or exaggerating when suggesting that none of this would have been possible without the help of my Real Estate Agent Rachel Alosky. Rachel is far too humble to take credit for the subtle influence she had in the process, but I cannot emphasize enough how much I appreciate her genuine and patient approach. Although she is confident in her ability, I don't think she has any idea exactly how talented she is. It was clear from the very beginning that she had my best interests at heart and understood that her success was intimately tied to helping me succeed which so many salespeople seem to rarely grasp these days. She was never pushy or focused on her own interests and was ALWAYS available anytime I needed her even for "stupid", "first-time buyer" questions which were in abundant supply during the time I was involved in a business relationship with Rachel. If you are in the market to buy or sell a home or just want advice from a genuine "salesperson" who is not just "in it for the money" then do not hesitate to contact Rachel Alosky at The Streppa Team! I had heard horror stories about buying and selling homes but with the help of Rachel and her team, the process was a breeze!"