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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9437 E Spiral Avenue Mesa, AZ 85212

New

$459,990

3 Beds

2 Baths

1,377 SqFt

Status Active

MLS # 6694633

Property Type Single Family Residence

Price Type --

This adorable cozy home offers 3 large bedrooms with our Roosevelet Premium Palette, including a stainless gas range, dishwasher, and microwave with granite kitchen counters Tile floors in all the main living areas with upgraded carpet in the bedrooms. Many upgrades in plumbing and electrical bring this homes design together for a lovely home to move into. This home also offers a large four panel slider to the back patio. Stop by today to see why Eastmark is the #1 place to call home.

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11230 W Marguerite Avenue Tolleson, AZ 85353

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$459,990

4 Beds

3 Baths

2,192 SqFt

Status Active

MLS # 6695667

Property Type Single Family Residence

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Below Market Financing Available!!!!!!!!!!! This single-story home features three secondary bedrooms off of the foyer, one with its own en-suite bathroom making it ideal for guests. The open layout encompasses the kitchen, dining and Great Room creating a spacious living area. Off the Great Room is the owner's suite which boasts a spa-inspired bathroom with a large walk-in closet. The covered courtyard and rear covered patio provide plenty of outdoor living opportunities. Photos are renderings of a model home, not the actual home.

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41090 W Haley Drive Maricopa, AZ 85138

$459,990

3 Beds

2 Baths

1,987 SqFt

Status Active

MLS # 6594869

Property Type Single Family Residence

Price Type --

QUICK MOVE-IN!!! It's our beautiful Belice - 3 bedrooms + flex space, 2 baths and a 3 car tandem garage. 12'x8' sliding glass door off the extended covered patio. Large walk in shower at owner's bath with EMS Casino Ice gloss in a 4x16 tile at shower surrounds . Stainless steel gas appliance package with undermount single bowl sink. Winstead Maple ''Cafe'' stained cabinets through out the home with 42'' kitchen uppers and rollouts at pantry. Himalaya white granite countertops in kitchen and on the enhanced kitchen island. Kitchen backsplash has a 4x16 Ice Matte tile. Flooring includes EMS 12x24 Baccarat Astra tile in all the areas of the home except beds/closets. Dual sinks at bath 2. Two-tone interior paint ''Agreeable Gray'', soft water loop and so much more. Seller to write contract and to verify all information with onsite agents. Water Company is Santa Cruz Water Company and Sewer is Palo Verde Utilities Company.

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1263 E Palo Verde Drive Casa Grande, AZ 85122

$459,990

5 Beds

3 Baths

2,549 SqFt

Status Active

MLS # 6637959

Property Type Single Family Residence

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If you're looking for a ranch style, true 5 bedroom split floorplan, in Casa Grande, AZ then look no further! This home, built in 2018, consists of 5 bedrooms, 3 full bathrooms, a 2 car garage and sits on a corner lot 8,448 sqft in size. It has a very spacious backyard with lots of citrus trees and even a large covered patio for those fall, winter and spring nights you may want to enjoy the Arizona weather. This home has had only one owner and has been kept in meticulous condition. There is surround sound throughout and even a multi-camera owned security system and it's all located within the Cottonwood Ranch community of Casa Grande.

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