How much can you afford for your mortgage? It's a common question among home buyers, especially first-time home buyers. In fact, it is a super important question to ask. After all, some mortgages are just much more expensive than others, and ensuring you find the right balance between affordability and funding will help you find the best financial support without putting yourself in financial peril!
You can also read more about the factors to consider before your first loan application.
That being said, here are six things to consider when trying to answer that question.
1. Your Income
This is the most obvious factor in determining how much you can afford for your mortgage. Lenders will look at your gross income (the amount you make before taxes and other deductions) to get an idea of how much you can afford to spend on your mortgage each month. You can also take a look at it yourself, figuring out how much you can comfortably afford each month.
2. Your Debts
Lenders will also look at your other debts, such as credit card bills, car loans, student loans, etc., to get an idea of your monthly debt obligations. The more debt you have, the less you'll be able to afford your mortgage, so if you're in a lot of debt, it is vital that you pay those off first before applying for a mortgage if you want to be able to afford as much as possible.
3. Your Credit Score
Your credit score is an important factor in determining how much you can afford for your mortgage. A higher credit score means you're a lower-risk borrower, which could lead to a lower interest rate on your mortgage and a lower monthly payment.
4. The Size of Your Down Payment
The size of your down payment will also affect how much you can afford for your mortgage. A larger down payment means you'll have to borrow less money, which could lead to a lower monthly payment making it more affordable. But of course, you will need to be able to afford a larger down payment in the first place, so saving up for that is a great idea.
5. Your Loan Program
The type of loan program you choose will also affect how much you can afford for your mortgage. Some loan programs, such as FHA loans, require a lower down payment but also require you to pay mortgage insurance, which could increase your monthly payment. You can take the time to look for favorable loans that allow you to afford a little more through benefits and the like.
6. Your Homeowners Insurance and Property Taxes
Don't forget to factor in the cost of homeowners insurance and property taxes when determining how much you can afford for your mortgage. These costs can add up, so be sure to include them in your budget.
By considering these six factors, you'll be able to get a better idea of how much you can afford for your mortgage. If you want to understand how much you can really afford, work with a loan officer to get pre-approved for a loan! That way, you'll know exactly how much you can borrow and what your monthly payments will be.
Lakeview Mortgage Bankers is your premier mortgage team, offering simple and straightforward mortgages. If you are looking for the best mortgages in New York, reach out to us today!