Your total monthly debt payments (mortgage + car loans + student loans + credit cards) should not exceed 36% of your gross monthly income. 2. Down Payment Amount 3.5%: Minimum for FHA loans.
Standard for many first-time buyer conventional loans. calculate home buying power
Check what a $1,950 principal/interest payment buys at current rates. At a 6.5% interest rate, $1,950 supports a loan of approximately . Step 5: Add Your Down Payment Add your saved cash to the loan amount. Your total monthly debt payments (mortgage + car
Result in higher rates, which raises your monthly payment and lowers the total house price you can afford. 🧮 How to Calculate Your Power To get a realistic number, follow these steps: Step 1: Determine Monthly Income Take your annual salary and divide by 12. Example: $100,000 / 12 = $8,333/month Step 2: Apply the DTI Limit Standard for many first-time buyer conventional loans
A bank's pre-approval letter is the only way to "lock in" your official buying power before shopping.
Buying power is the maximum amount you can spend on a home based on your financial profile. It combines your available for a down payment with the maximum loan a lender will grant you. 🏗️ The 3 Pillars of Buying Power 1. The 28/36 Rule Lenders typically follow these debt-to-income (DTI) ratios: