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Your credit rating, your income, and your debts, are the 3 most significant factors in helping to determine how much house you can afford, as well as the type of financing you'll qualify for.
Buyers who qualify for more financing, can buy more of a home. Other ways to help you afford more of a house can also come from any of the following:
Once the mortgage lender has an understanding of your personal finances, he or she will determine which loan program is best suited for you. To get there, your lender will calculate two important financial "ratios" to know how much you can afford, and borrow:
A housing expense ratio is compares your anticipated mortgage payment with your gross monthly income. Your debt-to-income ratio is your total monthly debt compared to your gross monthly income.
Here are how the ratios are applied for the 3 most popular types of loans:
If you'd like to attempt your own calculations of your purchasing power, try our helpful financial calculators. Note: you'll need to know the debt and income guidelines for these calculations:
This is your minimum payments on all accounts except those paid-off within the next 9 months. Utilities are not included in most calculations. Debts include your credit cards, car payments, recurring loans, child support, etc.
Cannot be used in income unless you have been receiving it consistently for two years and employer will verify it will continue.
Requires a two year history, and is calculated after all deductions.
Must continue to receive for an additional three years.
Principal, Interest, Taxes, Insurance, and HOA Dues, if mandatory.
Other factors that will help you increase your purchasing power are:
• Down payment or closing cost assistance from government agencies.
• Gifts from family members
• Incentives from home sellers
All the above factors will vary in their impact on your ability to qualify for a loan. Qualifications are also highly dependent upon your credit history and score.
As you can see, there's no substitute for professional help to determine "How Much House Can I Afford" to buy. With our assistance, you'll discover all the options and know how much your maximum purchasing power is. We're happy to offer you a 'no obligation' consultation, so we can get to know you, and your very special needs.
Simply fill out the easy form below, to arrange a mutually convenient time to visit. We'll respond quickly. We know you'll appreciate a professional evaluation of all your options.
The Michael Dagner Group, Brokers Guild Cherry Creek Ltd, 7995 E. Hampden Ave, Ste 100, Denver, CO 80231 Map
5 Minutes From The Denver Tech Center - Near Tamarac Square, 9-Mile Station, & Cherry Creek Reservoir