Unveiling the Art of House Hunting: Unearthing the Ideal Price Tag for Your Dream Home

Discovering the ideal price range for your dream home can feel like searching for the perfect porridge temperature, except this time, you're navigating through a sea of houses. But fear not! As your trusted mortgage professionals, Mortgage First Direct is here to guide you on your path to homeownership. Let's dive in and get started.

How to Use DTI to Calculate Home Affordability

First and foremost, let's discuss the Debt-to-Income Ratio (DTI). DTI is a crucial factor that helps us determine how much house you can afford. It compares your monthly income to your monthly expenses, including housing costs, car payments, student loans, and credit card debt. By crunching these numbers, we arrive at a DTI percentage.

Here's an example to help you understand. Let's assume your monthly income is $2,000, and your total monthly debts amount to $600. Divide $600 by $2,000, multiply by 100, and you'll have a DTI of 30%. Not too shabby!

Most lenders prefer a DTI ratio of around 43% or lower to qualify for a conventional mortgage.

Now, how does DTI translate into the overall cost of your dream home? Let's consider a 6% interest rate on a 30-year fixed-rate mortgage. For every $100,000 borrowed, your monthly principal and interest payments would be around $650.

To estimate your maximum mortgage amount, divide your DTI (30% of your monthly income) by $650 and multiply by $100,000.

($600/$650) x $100,000 = $92,307

Congratulations! You've just estimated your maximum mortgage amount.

Add your planned down payment (let's say $10,000), and you'll have a rough idea of how much home you can afford.

Continuing with our example, a $10,000 down payment plus $92,307 would give you a total home purchase price of $102,307.

Remember, this calculation provides a sneak peek and doesn't include other expenses or debts. It's important to consider those factors as well. Additionally, items such as child support, downpayment assistance programs, and current mortgage rates can impact your buying power.

Where to Find Accurate Answers - Fast!

While this scenario provides an estimate, we always recommend consulting with a mortgage professional for accurate calculations and expert guidance throughout this intricate process. Take advantage of our online calculator and reach out to us for an obligation-free consultation. With Mortgage First Direct, you'll be well on your way to finding a home that's not too hot, not too cold, but just right.

• Specific loan program availability and requirements may vary. Please contact our mortgage advisors for more information.