Q: How do I know how much of a house I can afford to buy?
A: The best way is to talk to a mortgage loan officer, as lenders have specific ratios that you will need to meet in order to qualify. But if you’re not serious about buying a home yet and are just curious, there are a couple of quick ways to figure that out. Keep in mind, these are just ball-park estimates to give you an idea. One way, is to take your gross annual income amount and multiply it by 2.5. (So if you make $60k a year, you could probably look at houses in the $150k range). To figure out what kind of monthly payment you can afford, (again, this is just an estimate), you can use the 30% rule. So using the same income scenario above, if you make $60k, you could probably afford a mortgage payment of $1,500/mo. And one more time, these are just quick tricks to give you a ball park estimate. To figure out exactly how much you can afford, you’ll need to consult with a mortgage loan expert. If you don’t know one, I can refer one to you!