How Much Mortgage Can You Really Afford for a Southern New Hampshire Home?

Owning a Southern New Hampshire home can be a sign of independence and success.  It allows you to build up equity and the mortgage interest and property taxes are tax-deductible.  Can you afford it, though? 

Reputable lenders look at a list of criteria to decide how much they’ll loan you.  This list includes:
·    Credit score
·    Existing assets including cash
·    Car leases or loans
·    Credit card balances
·    Debt consolidation loans
·    Home equity loans
·    Installment loans
·    Student loans
·    Other monthly debts
·    Size/source of your down payment

If you’d like to get an idea of what you can afford before talking to a lender, here are a few tools you can use to decide whether a Southern New Hampshire home is within your budget:

·    As a rule of thumb, your house hunting budget can be about 2.5 times your pre-tax annual income.  If you earn $50,000 a year, your budget for house hunting should be around $125,000.  The more money you have to put down and the less other debt you have, the higher your budget can be (up to about 4 times your annual income).

·    Your Housing Expense Ratio, which is principal, interest, taxes and insurance (PITI) shouldn’t be more than 25% to 28% of your pre-tax monthly income.

·    Your Debt-to-Income Ratio should be no more than 36% of your pre-tax monthly income.  This is the ratio between how much you owe and how much you earn.

·    Use an online calculator to figure how much home you can afford, or talk to a mortgage consultant.

“Qualifying for” and “can afford” can be two different things.  Shopping for a Southern New Hampshire home within your budget will save you a lot of heartache now and in the future.

If you'd like help determining how much mortgage you can really afford, I can help.  Call me at 603-821-1134 or email me at dave@daveheeter.com for more information.