Understanding ‘Disposable Income’ and How This Will Impact Your Mortgage Approval

There are few things more exciting than finding your ideal home, but with the rising cost of housing, a person’s dream home can often come with a very high purchase price. If you’re wondering how much home you can truly afford and how your cost of living will fare for your mortgage approval, here are some of the details on what you can expect when it comes to finding a home at an affordable price.

What Is Your Debt-to-Income Ratio?

Before deciding if a home is right for you, it’s important to calculate what your debt-to-income (DTI) ratio is to determine how much house you can afford. The debt amount will include any credit cards, existing mortgages and other loan payments that you pay down each month. To determine your maximum monthly payment, multiply your gross income by 0.36 and divide it by 12. This will give you the expenditure of debt, including your housing payment, that you should not exceed each month.

Determining Your Down Payment

There’s a lot of talk around the ideal amount you should put forward for a down payment, but this percentage can directly impact the amount of the house you can afford. If you are able to put down 20% of the purchase price of your home, this means your monthly mortgage payments will be minimized and this will decrease your DTI ratio. While a home may be out of your reach if you can only put 10 or 15% down, 20% down will ensure a higher amount of disposable income on a monthly basis, making your application more feasible.

Determine Your Lifestyle

While a lender may not reject your application outright if your debt-to-income ratio is higher than suggested, it’s important to know what kind of spending choices make sense for you so that you can make your monthly payments. If you have limited expenses above your mortgage and enjoy a Spartan lifestyle, it’s entirely possible that you’ll be able to manage a higher monthly amount. However, if you don’t have stable employment and are struggling each month, it may be a good idea to consider a less expensive property.

The monthly mortgage payment for your dream home may look like it’s manageable on the surface, but if your DTI ratio exceeds what is suggested, there may be issues with acceptance of your application. If you’re currently in the market for a new home, give me a call for more information – J.P. Cook – 602-320-4253.

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16520 W Flora Lane Surprise, AZ 85387

$460,000

2 Beds

2 Baths

1,930 SqFt

Status Active

MLS # 6677899

Property Type Single Family Residence

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The Grand awaits! This Gorgeous Valencia II model has been meticulously cared for and shows true pride in ownership. This one-owner home is the definition of Turn-Key and shows beautifully, offering 2 bedrooms, 2 bathrooms, plus a Den/Office. Key features include a gated front courtyard with water feature, Brand New interior paint, tile all throughout, Solar Tubes, sliding cabinet shelves in the kitchen, Corian counters, kitchen island and breakfast bar, tile backsplash, hot water heater re-circulator for instant hot water, cabinets in Laundry and Garage, extended rear covered patio with added Pony wall and Fire pit, and so much more! This isn't just a home, it's a lifestyle of refined comfort. The Grand is one of the top Adult communities in the U.S. and features 4 18-Hole Championship Courses, Fitness Center, Day Spa, pickleball and tennis courts, multiple swimming pools, dog parks, a softball field and over 80 clubs and special interest groups, plus entertainment venues that feature local and international performers. Join The Grand.

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2220 N Magdelena Place Casa Grande, AZ 85122

$460,000

7 Beds

4 Baths

4,236 SqFt

Status Active

MLS # 6678575

Property Type Single Family Residence

Price Type --

Welcome to this fabulous two-level residence located in Mission Valley! Discover a perfectly flowing layout showcasing spacious living areas adorned with glossy wood-look floor, arched doorways, soothing palette, & soft carpet in all the right places. The remarkable chef's kitchen offers white shaker cabinets adorned with crown moulding, granite counters, stainless steel appliances, double wall oven, modern track lighting, & a convenient center island. You'll also find an impressive loft with endless possibilities! Double doors open to the main bedroom, comprised of a walk-in closet, a private bathroom with dual sinks, & access to the cozy balcony. Spend relaxing afternoons in the charming backyard, featuring a covered patio & endless blue skies! Don't miss out on this one!

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12806 W Clarendon Avenue Avondale, AZ 85392

$460,000

3 Beds

2 Baths

2,037 SqFt

Status Active

MLS # 6679463

Property Type Single Family Residence

Price Type --

**SELLER OFFERING $10,000 IN CONCESSIONS** Welcome to your dream home nestled just minutes from the freeway. Step into the spacious great room, perfect for entertainment. Boasting a freshly painted interior, this home exudes a sense of warmth and modern elegance. The three-car garage provides ample space for your vehicles and storage needs, ensuring both convenience and functionality. Escape to the backyard oasis, featuring lush synthetic grass and a luxurious in ground hot tub, where you can relax and soak away the stresses of the day. Conveniently located just minutes from the freeway, this property offers easy access to nearby amenities, shopping, dining, and entertainment options.

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2813 Hidden Creek Circle Happy Jack, AZ 86024

$460,000

2 Beds

2 Baths

1,252 SqFt

Status Active

MLS # 6688152

Property Type Single Family Residence

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Escape to the pines in this charming property located in the Starlight Pines Community. This home was built in 2021 and ready for its new owner! As you enter the home you will see a bright and open living room, kitchen, and dining area. The kitchen has beautiful white cabinets with an island and stainless appliances. The home has neutral paint, upgraded lighting and fixtures, laminate flooring and granite countertops throughout. The inside laundry room is oversized and includes a sink with cabinets. As you enter the Primary bedroom suite you will see a separate sliding door to the back patio. The Primary bathroom has dual sinks, a walk-in tub, a linen closet, and also a walk-in closet. Don't forget about the relaxing covered patio overlooking into nature and wildlife at its best.

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