How much can you afford
Most people have a general idea of how much they feel comfortable spending. It’s equally important how much the lender calculates you can afford. Evaluate your financial situation as the lenders do. Typically, your total monthly housing costs should not exceed 30 percent of your gross monthly income.
Ask how your lender determines the total monthly housing cost figure. It usually includes your mortgage principal and interest payments, property taxes and hazard insurance (PITI). Determine how much your financial institution is willing to lend you. Call on your sales associate for help during the prequalification process. Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle monthly.
