When determining how much home you can comfortably afford, you will need to do some figuring and calculating. Not only will you need to figure out what your ideal monthly principle and interest payment will be, you will also need to take into account property taxes and monthly insurance premiums.
On top of finding out what an ideal payment would be, it is also necessary to find out how much home you can afford in light of your other financial obligations. Lenders use what’s called a Debt-to-Income or DTI ratio to figure out what you can actually borrow.
There are two parts to a debt-to-income ratio: front end, and back end.
Your front end ratio is calculated by taking your mortgage payment, including taxes and insurance and dividing that number by your monthly Gross income.
Your back end ratio takes your monthly mortgage payment as well as other monthly obligations such as: credit card debt, car payments, and student debt, and dividing that number by your gross monthly income.
Different loan programs have varying guidelines concerning qualifying Debt-to-Income ratios, as well other qualifiers, such as how high your credit score must be.
At Dunhill Homes we help make this process easier for you. When you contact a Dunhill Homes representative we will happily connect you with one of our preferred lenders who can help determine what type of loan would fit your particular financial profile.
To find out more about how much home you can afford, please contact a Dunhill Homes Representative today.