how much home can i afford
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How much home you can afford is different than how much can I qualify for. I'll tackle the how much home can I afford question here but will also comment on the qualifying as well. The easiest way to determine how much you can afford is to start with your monthly take-home pay, as in, how much actually hits your bank account every month. If your pay is variable, use your lowest month for this calculation to ensure you stay in a comfortable financial situation. I recommend gathering 3 months of bank statements to review and average your spending over the previous three months in categories like groceries, entertainment and leisure. Then add all your monthly bills to this number. Don't count rent here because when you buy a house you won't have that anymore. Include any monthly savings goals and get to a total for all expenses. Now simply deduct the expenses from your take home and the result should equal what you can afford from a budget standpoint. Because mortgage lenders use your gross income (before taxes and deductions) our calculations are a little more generous and most people find that they qualify for more than they want to afford. This is actually a great place to be because it means you have built some margin into your budget! Hope this helps!