The first thing that a person should do when they decide that they should purchase a home, then they should find out just how much that they can afford. What you will be able to afford really depends on what type of features that you are looking for. For example, do you want to be near a school? How much time will the commute from your new home to where you work? Both of which are legitimate questions that you should ask yourself.

When you do begin the house hunting adventure, you need to know the spectrum that you are willing to pay. As well as considering how much of a down payment that you can afford. Having a larger down payment will result is much lower monthly payments.

Why are debt ratios important to lenders?

The debt to income ratio that you have just shows lenders how much you can afford to pay on a mortgage. Many times consumers will see conventional loan debts referred to 28/36 qualifying ratio. While the FHA and VA loans run at a ratio of 29/41. Both of the numbers are used to examine two aspects of your debt load.

First, the front number is the maximum amount that lenders are willing to go towards your mortgage. This includes not only the mortgage, but home insurance, homeowners association fees and so on. The second number refers to the amount that lenders will allow to go towards other housing expenses and debt, such as electricity payments or credit card debt that will take longer than six to ten months to pay off.

For those that are unable to come up with a down payment that will lower the monthly payment to what you are paying for rent, then consider lowing some of your debt in order to qualify for a higher loan. The best way to calculate just how much you can afford is to use a mortgage calculator that takes into consideration your debt and income.