As you begin to shop for a home, knowing how much house you can afford is a critical first step. The best way to determine your affordability is to meet with a reputable mortgage lender. The purpose will be to discuss your financial situation and prequalify for a home loan. During this process, known as prequalification, a professional mortgage lender will be happy to help you without further obligation to prequalify for a home loan. For a rough estimate of the house payment you can afford, you may follow the steps here:
Multiply Total Gross (before taxes) Monthly Income (self + any
co-borrowers) by .28 to get your Estimated Maximum Monthly House Payment.
$ x .28 = $
(A) Multiply your Total Gross Monthly Income by .36. $ x .36 = $
(B) Add together your Monthly Installment Debts. (Include all debts with 10 or more payments remaining, e.g., car, credit cards, child support / alimony)
(C) Subtract the answer (B) from (A) to get your Estimated Maximum Monthly House Payment (principal, interest, taxes and insurance) (A) $ - (B) $ = (C) $ *
* If a difference exists between the amounts of your Estimated Maximum Monthly House Payment in Step One and Step Two, use the lesser of the two as your guideline. Before a lender makes a decision regarding your loan, additional information will be requested (credit history, other income sources, etc.). Formulas and ratios may vary based on loan type and lender.
Selling a home can be complex. Fickling & Company uses market analysis, MLS listing services, an extensive advertising campaign, and the expertise of our professional real estate agents to help you with selling your home in the Middle Georgia area.