Top factors to consider to determine if you can afford a mortgage

by Lee Chambers 06/16/2024

Factors to consider when deciding if you're ready for a mortgage  featured image

As you enter the world of real estate, funding for your next home purchase stands on the forefront of the homebuying process. Understanding what you can afford may help you in starting your journey to find your next abode. 

What factors determine how much house can I afford?

To figure out your finances to determine how much home you can afford, consider these factors: 

  • Money you have saved up for a down payment and closing costs. 
  • Your monthly income, including your salary and from other sources. 
  • The debt you’ve accrued. 

The 28/36 rule - what it is & how it works

If you’d like to use a system to manage your finances, consider utilizing the 28/36 rule. With this method, you dedicate no more than 28 percent of your gross monthly income to household expenses such as utilities and mortgage payments. Your debt shouldn’t take over 36 percent of your gross income. 

Using this system helps you manage debts and financial duties, and demonstrates to mortgage lenders you can afford a monthly mortgage payment. 

Should I buy a house?

Before starting the home buying journey, it’s ideal to consider your overall standing to make sure you’re ready to purchase a home. 

Consider your credit score - a higher credit score may spell approval from more lenders and lower interest rates. Do you have adequate cash reserved to afford a down payment, closing costs and other fees associated with buying a home? By answering these questions you’ll get a better idea if homeownership is feasible in the near future. 

Purchasing a home takes effort and much consideration, so take your time during the process and figure out your finances to jumpstart your journey.



About the Author
Author

Lee Chambers

Canestar Homes LLC is a real estate redevelopment company that buys and sells homes in Northern VA and in some cases the DC area and other areas of the country. We buy houses at any price point and in any condition - often in cash and can close on your timeline. If any of these sound familiar - call us: - Vacant homes - Repairs needed - Fire damaged - Mold, water damaged - Divorce - Behind on mortgage payments More information is on our website.