How Much Mortgage Can I Afford? Try Out an Affordability Calculator
You have a steady income, a chunk of money saved up, and you’re starting to feel confident about your finances. You think you might even be ready to jump into homeownership once and for all. The only problem? You’re not entirely sure if you can afford to take the plunge. And you’re asking yourself: How much mortgage can I afford?
The truth is, home affordability can be a surprisingly complex concept, with a lot of different variables to consider. How do you know how much money you can borrow for a home loan? What factors does the lender look at when deciding how much to loan you? What’s even included in a mortgage payment? And how can you make sure you’re not overspending on your mortgage?
If you’re feeling overwhelmed, you’re not alone — and you’ve come to the right place.
We’ve enlisted the help of Richard Helali, Mortgage Sales Leader at HomeLight, to walk through the basics on home affordability. Here’s what buyers need to know.
What’s home affordability?
The term “home affordability” sounds pretty straightforward. It’s how much home you can afford, right? Well, kind of.
How much you can afford to spend on a mortgage is partly a personal decision, based on your own unique financial situation, plus your savings and investment goals.
But there’s actually another dimension to home affordability, and it’s the one we’re going to focus on here: how much you can borrow for a mortgage. As in, how much you can afford according to the lender.
A lender has to protect their investment and minimize risk, so they only lend money to qualified buyers, and only up to a certain point. Who’s a qualified buyer, and what is that point? We’ll get to that soon.
For now, it’s important to understand that what you think you can afford and what the lender is willing to lend you may be two different things. Both factor into home affordability.
