If you’re thinking about buying a house, knowing how much you can afford is helpful. This will inform you how much money you need to remain under in order to make a financially sound property purchase.
However, it’s critical to consider this subject from two separate angles. The first is straightforward: how much of a mortgage would you be eligible for? Many factors influence the answer to this question. Your income, existing obligations, interest rates, credit history, and credit score are all aspects to consider.
The second viewpoint is a little more subjective: how much space do you actually require? You will very likely qualify for a loan amount that is higher than you require. However, just because money is available does not imply that you should accept it. This is where you must curb your desires in order to make an informed mortgage decision.
Make a budget and know your expenses
Make a list of all your monthly costs in order to understand what percentage of your income is currently allocated to other bills and expenses. Here are some common bills and expenses you should be sure to include if they apply to you:
- Credit card debt
- Car payments, car insurance, maintenance, & gas
- Student loans or tuition payments
- Food & entertainment budget
- Healthcare expenses
- Phone & utilities
- Clothing & beauty
- Charitable & religious donations
- Misc. recreational purchases
This list is not all inclusive, but can be a helpful place to start when considering all of your regular expenses and how much mortgage you can comfortably take on without sacrificing in other areas.
Use a Mortgage Calculator
Use the mortgage calculator to the right to get a rough idea of what a monthly mortgage amount specific to what you are looking for and your circumstances would look like. Please note, however, this calculator and others on this site are provided without warranty regarding their accuracy or applicability to your individual circumstance. They are for your personal use and are not intended to replace professional financial advice.
