• Financial experts often recommend that your monthly housing costs (including mortgage, taxes, and insurance) shouldn’t exceed 28% of your gross monthly income. Additionally, your total debt payments, including housing, should be below 36% of your income. This rule helps ensure you can manage your mortgage along with other financial obligations.
• When you speak to a lender to get pre-approved, they will take into account all of your debts vs. your income, but have an idea of what you would like to pay per month because a lender will not use your lifestyle budget in their equations. Know what you are comfortable paying, not just what you can afford.
• Owning a home involves more than just the mortgage payment. Don’t forget to budget for property taxes, homeowners insurance, utilities, maintenance, and potential homeowners association (HOA) fees. Most of these items are known to the buyer based on the average sales price, or can be looked up on the county tax assessment. On average, people typically have to spend 1% of the total value of the home on maintenance per year. 
• The size of your down payment will affect how much you need to borrow. While some loans require as little as 3% down, a larger down payment can lower your monthly payments and eliminate the need for private mortgage insurance (PMI). Decide how much you can save for a down payment without depleting your emergency fund.
  • Your lender will be able to go over different mortgage scenarios based on how much money you put down. 
• Check your credit score. Most mortgage packages look for a credit score of at least 620, with a higher credit score offering better options. A higher credit score can help you secure a lower interest rate, saving you thousands of dollars over the life of your loan. If your credit score needs improvement, consider paying down debts or correcting any errors on your credit report before applying for a mortgage.

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