How Much Home Can I Afford in York, PA?

    Any prospective homebuyer has one burning question as they begin their search for a property — how much home can I afford? That’s an excellent question to start with given that a new home is most likely the largest investment you’ll ever make. Here’s a look at key factors that will determine how much house you can qualify for.

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    Income: How Much Do I Make?

    Perhaps the biggest factor in how much home you qualify for will be your income. How much money do you make? How much money do you and your spouse make together?

    A simple rule of thumb many lenders use is your home payment, including principal and interest plus taxes and insurance, shouldn’t account for more than 28 percent of your pretax income each month. That is, if your entire pre-tax income for one month is about $5,000, your total home payment shouldn’t exceed $1,400.

    Monthly Obligations: How Much Do I Owe?

    But income isn’t the only factor in how much home you can qualify for. What else are you paying on each month? If you’re loaded down with two car payments, student loans, credit card debt and other monthly obligations, the amount of money a lender can offer is going to be less than if you had no debt at all.

    Lenders always look at your debt-to-income ratio. A borrower who has lots of monthly obligations is going to have a relatively high debt-to-income ratio compared to a borrower who has none, which makes it more difficult to get more money through a home loan.

    Credit History: How Trustworthy Am I?

    Lenders are also willing to give more money to borrowers who have outstanding credit. This makes sense, of course, as borrowers who have a proven track record of taking care of their obligations will be more attractive to lenders. But there’s one other wrinkle many new homeowners run into through no fault of their own — lack of credit history.

    If you’re just out of college, it’s possible a lender will pull your credit and simply not find much to go on. It’s not that you have bad credit, but rather you just don’t have much credit history at all. This can limit your options when searching for a home loan.

    Down Payment: How Much Money Do I Have on Hand?

    How much home you can afford in York, PA, will also be influenced by your down payment. If you want to buy a $200,000 house and the lender is offering you $150,000, that can be a problem. Unless, that is, you have $50,000 to put down and cover that gap. Having a large chunk of cash you can use as a down payment can greatly increase your buying power.

    Interest Rate: How Low Can I Go?

    And, finally, interest rates affect how much home you can buy in York, PA. The higher your interest rate, the higher your monthly obligation — which affects the 28 percent you’re trying to stay under each month. The lower the interest rate, the less you’ll be paying each month.

    How Much House Can I Qualify for in York, PA? Ask CENTURY 21 Core Partners

    The best thing to do before getting started with your house search is to get a simple pre-qualification from a lender. This pre-qualification gives you authority when you make offers on homes, and it also gives you an idea of what types of financing you quality for. At CENTURY 21 Core Partners, we can help connect you with lenders that can help you get started.

    Contact us today about starting your search for a new home.

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