How Much Home Can You Afford? Here’s What You Need to Know

Buying a home is an exciting milestone — but one of the first and most important steps is understanding how much you can truly afford. At Approved Mortgage, we’re here to make sure you’re financially ready and confident as you begin your homebuying journey.

Start with Your Budget
The general rule is that your monthly mortgage payment should not exceed 28-30% of your gross monthly income. This includes the principal, interest, taxes, and insurance (often referred to as PITI).

Key Factors to Consider:

• Income: Review your monthly income from all reliable sources.
• Debt: Lenders look at your debt-to-income ratio (DTI), which compares your monthly debts to your income. Ideally, your DTI should be under 43% to qualify for most loans.
• Down Payment: A larger down payment lowers your loan amount, reducing your monthly payment. Some loans require as little as 3%, but 20% can help you avoid private mortgage insurance (PMI).
• Credit Score: A higher credit score often means better loan terms and lower interest rates, which can increase how much you can comfortably afford.
• Other Costs: Remember to factor in closing costs, home maintenance, utilities, and potential HOA fees.

Use Mortgage Pre-Approval as Your Guide
Getting pre-approved with Approved Mortgage not only shows sellers you’re serious — it also gives you a clear picture of your buying power. A pre-approval letter outlines the loan amount you qualify for based on your financial profile.

Think Beyond the Numbers
Just because you qualify for a certain amount doesn’t mean you have to spend it all. Focus on a monthly payment that leaves room for savings, emergencies, and enjoying life in your new home.

Ready to Find Out What You Can Afford?
The Approved Mortgage team is ready to help you crunch the numbers and explore your best options. Whether you’re buying your first home or your next, we’ll help you every step of the way.

Contact us today to get started with a free consultation!