How Much House Can I Afford


Purchasing a house is a very big task, and as much as you must get a house. It is also very important to ensure that you can afford the house payment. When planning to buy a house, you need to decide the kind of house you want to buy, and how much mortgage you will be able to afford. One way to start is to get pre-approved by a lender.

How Much House Can I Afford

The lender will look at some factors such as your income, debt, and credit, and how much you have saved for a down payment, to come up with the loan amount you can afford.

One rule in purchasing a house is to aim for one that costs about two-and-a-half times your gross annual salary. Also, all your monthly home payments should not exceed 36% of your gross monthly income.

The money you will spend on a house is dependent on some factors like the amount of your loan and the mortgage rate you lock in.

The term of your loan, with some other expenses like property taxes, insurance, and at times homeowner’s association fees and private mortgage insurance.

Factors that Influence How Much House You Can Afford

Before you start looking for a house, the first step is to know how much house you can afford and this is influenced by some factors.


To know how much house you can afford, you will need to calculate your income. The more money you make, the more house you can Purchase. Your monthly income will dictate how much you can afford to spend on a house.

Credit Score

Your credit score, if high will play a positive role in purchasing a house. A high credit score will get you a low-interest rate, and when your interest rate is low, you can then afford to borrow.

Debt-to-income Ratio

Your DTI compares your monthly income to your monthly debt. If you have a high debt relative to your income, you will have a higher DTI, but if you have a low debt relative to your income, you will have a low DTI.

When your DTI is high, it will be hard for you to get a mortgage. So you should pay off your debt before applying for a mortgage. if your debt makes it so your ratio is higher, you might still get approved for a mortgage, especially if you have a great credit score.

Down Payment

When your down payment is large, you tend to get a better mortgage rate; this is because lenders take less by giving you less money.

Aside from the price you intend to pay and the amount you already have for a down payment. There are some other expenses involved in purchasing a house, they include:

Your Closing Costs. It refers to recording fees or transfer taxes in your location, and also the fees charged by your lender band lawyer.

Property Taxes. This is added to your monthly mortgage payments.

Homeowner Insurance. This can be paid through escrow.

Helpful Tips for Buying an Affordable Home

Here are some tips that will help you in buying an affordable house.

You have to Stay within your Means

A lender may want to offer you a larger mortgage. It may be something you are comfortable with.

But you do not need to accept the offer because you can afford it. You should only commit to the payment that fits into your overall budget.

Shop around to Save on Homeowners Insurance

You should solicit quotes from other insurers so at to ensure you are getting the best offer.

Research the Neighborhood

You need to know the area where you want to live in. Consider how long you will get to work from the house and other important things.

Steps to Take after Knowing How Much House You Can Afford

Once you figured out how much house you can afford, you will need to find a house that matches your criteria. And here are the steps to take in finding the right house.

First, you need to find a Lender

You need to meet different lenders to know the mortgage rate they are offering. This will help you narrow down your choices.

Next, get Pre-approved for a Mortgage

A pre-approval letter will inform you how much you are qualified to borrow for a home.

Then, you should find a real estate agent

A real estate agent will help you navigate your local housing market. And also help you figure out what offer you should make on the house you are interested in buying. A real estate agent can also help you negotiate with the seller.

After finding a real estate agent, you should Apply for a Mortgage

If approved, your money will be granted to you at the right time. It can take up to 30 days or more.

Close in your Mortgage

When your lender is ready to close on your loan, you will have to bring a check for your down payment.

And you also have to sign the necessary documents to put your mortgage into place. With these steps, you will be able to purchase an affordable house.


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