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How Much Can You Afford?
A quick way to get a very rough estimate is to multiply your annual gross (total, pre-tax) income by 2.5-3. So if your annual salary is $50,000, you should be able to qualify for a home listed at $125,000 to $150,000.
A more accurate and actually, the first place to start would be to contact a mortgage lender and see if you pre-qualify.
Pre-qualifying for a mortgage is a quick and simple step. Most mortgage lenders can take your information over the phone or have you fill it out online and let you know the results in just a few minutes. They will take a look at your credit score but this initial check will not mark against your current score – a full report will be checked later.
Annual Salary x 3 = Sales Price of Home
The mortgage lender will also look at your Housing Expense Ratio or your Debt-to-Income Ratio.
Housing Expense Ratio: Your housing expense ratio should 28-31% of your gross monthly income.MONTHLY INCOME X 28% = TOTAL MONTHLY HOUSING (Mortgage+Taxes+Insurance)
Debt-to-Income Ratio: Your total debt is all of your living expense (credit cards, student loans, car loans, etc.). This should not exceed 30-40% of your gross monthly income. If it is, you should work on reducing your debt before considering buying a home.MONTHLY INCOME X 40% TOTAL MONTHLY DEBT
If you need any more information on this topic or buying or selling a home, contact us. We are here to help.
Pamela Edwards, realtor Ebby Halliday Realtors, Inc (469)877-5631 email me
A more accurate and actually, the first place to start would be to contact a mortgage lender and see if you pre-qualify.
Pre-qualifying for a mortgage is a quick and simple step. Most mortgage lenders can take your information over the phone or have you fill it out online and let you know the results in just a few minutes. They will take a look at your credit score but this initial check will not mark against your current score – a full report will be checked later.
Annual Salary x 3 = Sales Price of Home
The mortgage lender will also look at your Housing Expense Ratio or your Debt-to-Income Ratio.
Housing Expense Ratio: Your housing expense ratio should 28-31% of your gross monthly income.MONTHLY INCOME X 28% = TOTAL MONTHLY HOUSING (Mortgage+Taxes+Insurance)
Debt-to-Income Ratio: Your total debt is all of your living expense (credit cards, student loans, car loans, etc.). This should not exceed 30-40% of your gross monthly income. If it is, you should work on reducing your debt before considering buying a home.MONTHLY INCOME X 40% TOTAL MONTHLY DEBT
If you need any more information on this topic or buying or selling a home, contact us. We are here to help.
Pamela Edwards, realtor Ebby Halliday Realtors, Inc (469)877-5631 email me