How Much House Can I Afford? A Guide To Determining A Home

Houston, TX, Oct. 04, 2022 (GLOBE NEWSWIRE) — Blink Lending & Investments is a full-service local independent mortgage company partnering with its Clients throughout their home buying and real estate investing careers.

Buying a home is a huge financial decision and one that should be taken very seriously. Before you start looking at listings online or in person, you need to figure out how much home you can afford because the last thing you want is to fall in love with a home that costs more than you’re comfortable spending.

So, how do you determine how much you can afford when it comes to buying a home? It’s easier than you may think. Let’s look at some of the factors and equations lenders use when working on getting your mortgage loan approved.

Know Your Income
Lenders base a large part of the preapproval process on your income – it will probably be the first thing they ask you! You’ll want to find out how much you make each month before taxes are taken out. This includes any source of money you bring in as long as it is documented.  

Usually, pay stubs and tax returns will be looked at, and if you work a freelance job or a side hustle, you’ll need 2 plus years of experience for that income to count towards your loan qualifications. If you have less than 2 years of work experience or if that income can’t be verified, it may not be included in the amount of money you’re approved for, which could mean you either have to have a larger down payment or buy a less expensive house. 

Is My Income The Only Factor When It Comes To Loan Approval?
Lenders look at more than just your income when they work toward getting your loan approved. They will look at what is called your debt-to-income ratio (DTI) to give them a better understanding of your financial situation. 

There are two types of debt-to-income ratios: front-end ratio and back-end ratio. With the front-end ratio, your lender will look at how…