Owens & Company: How Much House

How much house can we afford?

Three main issues in determining how much home you can afford are:

monthly income before taxes

debts

cash for the down payment and closing costs

How much home can we afford calculator?

Before using the calculator get the following information together, it may save you time.

	Number of years of the loan
	Interest rate
	Total of monthly payments for bank loans, tuition loans, auto loans
	Other monthly payments like alimony, child support, real estate loans
	Other debt in which you make monthly payments
	Taxes-estimate at $12 per $1000 value
	Homeowners Insurance estimate at $30 per month

Considerations for getting a loan

Housing expenses should not be more than 25 to 28 percent of your monthly gross income. These expenses include the principle on the mortgage, interest payments, property taxes, and homeowner's insurance.

Monthly payments on other loans, alimony or child support, along with your mortgage payment should not be more than 33 to 36 percent of your monthly gross income.

The lender will expect up to 20 percent of the asking price of the house as a down payment up front, along with closing costs of 3 to 6 percent of the loan amount as money available to you. Check with your lender for exact requirements on down payments and closing costs.

Money for the down payment can possibly be obtained by purchasing Private Mortgage Insurance. This allows you to pay less down payment, while protecting the lender against loss if you default. Part of the Private Mortgage Insurance premium is paid up front at closing and as monthly premiums after that.

Now that you know how much home you can afford, don't forget the other expenses that go along with that home like maintenance, electricity, heat, water and sewer, and any homeowner's association dues that may be required by your new neighborhood. According to the American Housing Survey, the average monthly cost for these items is listed in the chart below:

Electricity	$63
Piped Gas	$39
Water	$23
Maintenance	$25
Homeowner Association dues	$134

To make it simple to figure out how much house you can afford, follow this link to Mortgage-X Information Service to use the calculator to compute how much you can borrow.

This information is provided as a service of Owens & Company for general information purposes only, it is not a guarantee of loan qualification or approval. Check with your lender for their policies.