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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14042 N 92nd Avenue Peoria, AZ 85381

$458,900

3 Beds

2 Baths

2,038 SqFt

Status Active

MLS # 6685815

Property Type Single Family Residence

Price Type --

Beautiful home with very little maintenance. Freshly Painted inside and out. New carpet. New kitchen sink and dishwasher and Microwave. The countertops in the Kitchen resurfaced. Inviting fireplace in the family room. Bonus room between two Bedrooms. Could be an office, or playroom. Basketball playcourt in the back. Beautiful fenced pool. Prime location, close to P83, and has amazing restaurants. Sports Facilities. Medical Facilities, and Great schools. Local to Westgate, State Farm Stadium, Spring training, Peoria Sports Complex. Arrowhead Shoping mall. Rio Vista Community Park along with hiking and bike paths. For fun in the sun, boating and water crafts Lake Pleasant is 10 miles away! Very Desirable and sought out Neighborhood. This home will go fast, dont miss out !

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10097 S Vaquero Lane Hereford, AZ 85615

$458,719

3 Beds

2 Baths

2,051 SqFt

Status Active

MLS # 6612437

Property Type Single Family Residence

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Stunning mountain and valley views from this 3bed+/2bath 2051sqft home in the popular Kings Ranch community. Lots of natural light in the open concept kitchen complete with white painted cabinetry, quartz countertops, stainless steel appliances, and tile backsplash. Wood look tile throughout living areas with upgraded carpet in the bedrooms. Plumbed for soft water & tub sink in garage, can lighting throughout, and prepped for landscaping irrigation w/ timer. Energy Star and Environments for Living Certified home.

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25528 N 160 Lane Surprise, AZ 85387

$458,590

4 Beds

3 Baths

2,049 SqFt

Status Active

MLS # 6669076

Property Type Single Family Residence

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Brand new, energy-efficient home available by Mar 2024! Large great room and dining space. The kids can create their own play space in the included flex space. White cabinets with white granite countertops, modern gray tile flooring with greyish brown carpet in our Distinct package. Come tour our five brand-new models at Paloma Creek. Envision your next chapter by experiencing the exclusive amenities including a clubhouse, pool, and future fitness center. Pick from a variety of floorplans featuring walk-in closets and flex spaces. Each energy-efficient home comes standard with features that allow your whole family to live better and breathe easier too.* Visit Paloma Creek today. Each of our homes is built with innovative, energy-efficient features designed to help you enjoy more savings.

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8219 E Mcdonald Drive Scottsdale, AZ 85250

$458,500

2 Beds

2 Baths

1,248 SqFt

Status Active

MLS # 6641453

Property Type Townhouse

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Stunning full industrial modern townhome renovation! No expense spared on this one. Brand new kitchen with ceiling raised to 8'. Shower added to convert to 2 full bathrooms. Laundry moved upstairs. Polished concrete flooring on 1st floor with exposed CMU block wall. LED accent strip lighting throughout. WIFI light switches so you can control your lighting from your devices. The backyard was also updated. New wood fencing to create a warm ambiance, along with new cacti and rocks against a black accent wall. This home will not disappoint!

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