How Much House Can I Afford?

• Income and Debts: Assess your total household income and current monthly debts. To calculate your debt-to-income (DTI) ratio, which is one measure used to determine your lendability, you can divide the sum of all your monthly debts by your gross monthly income. Various loan programs may require different minimum DTI ratios, which can affect your borrowing power.
• Credit Score: A strong credit score improves your chances of securing a favorable mortgage rate, ultimately impacting the amount you can borrow.
• Down Payment: Consider how much you can put down as a down payment. A larger down payment often results in a more affordable monthly mortgage, but we understand that a 20% or greater down payment can feel unattainable, especially to first-time homebuyers. We offer zero to low down payment loan options, as well as down payment assistance programs to help you achieve homeownership. Keep in mind, a lower down payment amount could require private mortgage insurance (PMI), which would be an additional cost to consider.
• Interest Rates and Loan Terms: Interest rates and loan terms, or the amount of time you have to pay back what you’ve borrowed, significantly influence the overall cost of a mortgage.

• Realistic budgeting: By obtaining a pre-qualification, you can set a realistic budget for your home search, helping you focus on properties within your financial reach.
• Gives sellers' confidence: Sellers often prioritize offers from pre-qualified buyers, as they know these individuals are serious and capable of securing financing.
• Swift decision-making: Armed with a pre-qualification, you can act quickly when you find the right home, helping to avoid delays.

• Closing costs: Additional fees paid during closing that can include your origination fees, points, appraisal fee, credit report fee, flood certification, pre-paid interest, and more. Typically, these are 2-5% of the home’s purchase price but vary vastly depending on property location and the value of the home you are purchasing.
• Living expenses: Ensure you can cover not only the mortgage but also everyday living expenses, including utilities, groceries, insurance, and other necessities.
• Insurance, taxes and fees: Factor in the cost of homeowners insurance, property taxes, and any Homeownership Association (HOA) dues.
• Planning for the future: Take into account potential life changes such as starting a family, further education, or career shifts.
• Emergency fund and savings: Always prioritize maintaining an emergency fund and savings for unexpected expenses, routine home maintenance, or future investments.

Content provided by TowneBank Mortgage for informational purposes only. The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend. TowneBank Mortgage  NMLS# # 512138. Equal Housing Lender