Home Affordability

Determing Home Affordability and an Estimate of What You can Qualify for.

Home Affordability

Typical home loan guidelines do not allow for the total housing expense, plus debt to exceed 49.9% of gross income. Lets take a look at a simple example for;

  • Home buyer’s earning combined income of $150,000 annually.
  • Own 2 cars with total monthly payments of $895.00.
  • Credit card debt of $25,000 with minimum monthly payments of $1,250.00 per month.

$12,500 monthly income. ($120,000 / 12 months)
$6,237.50 available towards total debt servicing of housing expense and monthly debt ($12,500 x 49.9% = $6,237.50).

$2,145.00 Mortgage consumer debt ($895 for cars + $1,250 for credit cards).

$4,092.50 is the total available ($6,237.50 less $2,145.00) to go towards the total Housing Expense (Principle & Interest + Property Tax + Home Insurance plus + HOA).

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