People think this is an easy question, but it's not. First add up all the debt you have, anything that shows up on a credit report. Don't include. show more People think this is an easy question, but it's not.
First add up all the debt you have, anything that shows up on a credit report. Don't include insurance, or doctor bills unless they're on a payment plan, or tuition (student loan yes, but not tuition for grade school or high school), food, gasoline. not stuff like that.
Now figure out what the payment on the loan amount you want would be. Here's the one I like: http://www.mortgage-calc.com/mortgage/si.
There's also a screen there about how much can I afford. The rule of thumb is this:
Your gross (pre-taxes) monthly salary must be greater than 28% of the sum of the
monthly mortgage and monthly tax payments.
Your gross (pre-taxes) monthly salary must be greater than 35% of the sum of the monthly mortgage, monthly tax and other monthly debt payments.
Now in practice, the bank where I work will go to a total debt-to-income ratio of 45% to 50% depending on your credit score. I haven't done any loan processing in a long time, but I think the cut off score is 740 for the 50% and 45% for under that.
But even if the bank says you can afford $XXX for a monthly payment, make sure that feels comfortable to you.
A VA loan will let you make $0 downpayment, but from a seller's point of view, they're a big pain. I would probably reject a VA contract unless I was pretty desperate.
Debdeb · 7 years ago