Living comfortably or house poor? 🤔 I mean, is that even a question?
When you move into your new home, the last thing you want to worry about is “How am I gonna afford this thing …and everything else?” So, how much of your monthly income should go toward a house payment so you can live comfortably and really enjoy your new home?
When you apply for a mortgage, your lender will approve you based on, among other things, your Debt-to-Income ratio, or DTI. Generally speaking, you want to stay under that 50% mark.
Calculating your DTI is easy:
If your gross monthly income is $5,000 (remember, this is pre-taxed money), your minimum monthly obligations (so, this would be a mortgage payment, credit card minimum payments, personal loan payments, any court-ordered monthly payments, student loan payments – you get the idea) all equal $2,500 a month…
2,500 ÷ 5,000 = 50%
… then your DTI would be 50%.
Of course, this number is not set in stone. It’s different for everyone depending on their situation. If you’re a first-time home buyer, you’ll probably want to play it safe and not get so close to that 50% number to give yourself some wiggle room in case of surprise repairs, to buy furniture, to hire the kid next door to cut your grass… a Zumba class?
If you want to find out how much you can comfortably afford, give your Homespire Loan Officer a call. They can quickly run the numbers and give you a good idea of how much home you can afford… and still have money left over for the fun stuff.
Visit https://www.homespiremortgage.com/loan-officer-search/ to find a Homespire Loan Officer in your area.