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How Much Mortgage Can I Qualify For?
What Mortgage Can I Afford?
Purchasing a home is a large investment of money and your time even if it’s not your first home-buying experience. So, it’s crucial to research, plan, set a budget a save for the journey ahead. Before asking, how much mortgage can I qualify for? Ask, what mortgage can I afford?
You may qualify for far more than you’re actually able to spend monthly on a mortgage payment, so let’s break down the factors you should consider before starting the preapproval process.
Factors that Impact Mortgage Affordability
The first step in figuring out how much mortgage you can afford or will be qualified to borrow begins with a few key factors. These include your monthly income, monthly expenses, savings, your credit history and additional debts.
You probably already have a good idea about your household monthly income, which you should receive regularly. Next, take into account your monthly expenses—everything from your streaming channels, groceries, utilities and beyond. This should also include your debt payments to credit cards, student loans, personal loans or vehicle loans.
The third factor is your savings. You’ll need anywhere from 6%-20% saved for a down payment with more saved to cover the added fees like closing costs. Finally, your credit history and score will give your mortgage lender a picture of your borrowing history.
How to Calculate Mortgage Affordability
Purchasing a home can be complicated, but these extra steps make the process easier to determine your budget and how much you can comfortably afford. Once you have your budget itemized, take a closer look at your debt-to-income ratio, which is something your mortgage lender will also take into account during preapproval.
Your debt-to-income ratio compares your total monthly debts like credit cards, student loans, vehicle loans, etc. to your monthly pre-tax income. This calculation will help your lender figure out how much you’re qualified to borrow. If you have a low ratio, you may be approved to borrow an amount well above your current budget. That’s why it’s important to set a home-buying budget to keep your overall financial goals on track.
In addition to your monthly mortgage payment, you’ll also want to plan and save for the added costs and fees associated with purchasing a home. Each process is different, but some of these include mortgage application fees, a home appraisal, credit application, home inspection and closing costs. It’s a good idea to talk with your mortgage lender about a transparent list of fees you’ll be asked to pay when buying a new home since they’re different for every circumstance.
Mortgage Affordability Calculator
Carefully selecting a mortgage that you know you can afford will help ensure that you can successfully pay for your new home. This Coach session will guide you through setting a goal monthly mortgage payment and finding how much mortgage you can afford. It will also explain the main factors that affect mortgage costs. To begin the Coach session, select Get Started. Next, follow along, answer questions and provide information when asked.
Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.
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