Wondering How Much Mortgage You Can Afford? Here’s How to Calculate It

Many people are aware of the financial commitment that is involved when investing in a home, but what that amounts to is different for every person. From what you can afford to what a lender will allow, there are plenty of details involved in determining the right home for you. If you’re not quite sure what the right price is, here’s how to approach home ownership and determine your debt-to-income.

Utilize the Calculators on My Website

Visit my website at www.JPCookAZRealEstate.com.  Click on ‘Buyers’ then utilize the Affordability Calculator, which will tell you how much house you can afford with your current income and expenses.  You can also utilize the Mortgage Calculator to determine how much your monthly house payment will be.

Do it Yourself:  Calculating Your Debt-To-Income Ratio

You may not know what your DTI ratio is, but it has a lot to with how much home you can afford. In order to calculate this amount, add together all the debts you owe each month and divide them by your monthly pre-tax income. For example, if your credit card is $150 and your rent is $900, your debt amount would be $1050. Divide this amount by your income, say $2500, to get 0.42. This means your DTI ratio is 0.42 or 42%.

What Your DTI Means

While a DTI in the high 20s or low 30s is good, anything that hovers above 43 percent may serve as a red flag to the lender. The lower your DTI ratio is, the more likely it is that a lender will approve your mortgage application since you’ll have the disposable income to deal with financial hurdles. If your dream home has you hovering close to this amount, it may be a sign that it’s a bit out of reach.

How Do You Want To Live?

It’s quite common to be taken over when you find your dream home and decide to commit. However, buying a home is a huge financial commitment, and if you’re buying more than you can afford it may drain your well-being over time. Instead of diving in, determine other expenses that are likely to come up in the next few years, whether it’s travel, a child or a new car. It’s important to have the home you want and budget when buying it, but you’ll still need to financial wiggle room in case something comes up.

There are a lot of factors involved in determining how much house you can afford, but by calculating your DTI ratio and being aware of your spending plans, you’ll be well on your way to an ideal price range.  Give me a call for more information – J.P. Cook – 602-320-4253.

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11100 W Alsdorf Road Arizona City, AZ 85123

$19,999

2 Beds

1 Bath

840 SqFt

Status Active

MLS # 6630543

Property Type Manufactured Home

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Very well maintained 2 bed 1 bath unit in this 55+ Community. Land lease includes water, sewer and trash. Low maintenance yard. This unit has inside laundry. Community pool. Grilling area and coined laundry. Short driving distance to local shopping and medical facilities.

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9447 E Kedron Drive Hereford, AZ 85615

$19,900

2 Beds

1 Bath

1,462 SqFt

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MLS # 6480354

Property Type Manufactured Home

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Fix it up! Clean it up! Live it up! A severe fixer upper located in a quiet neighborhood. Owner will carry.

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659 N Utah Avenue Hayden, AZ 85135

$19,000

6 Beds

3 Baths

1,870 SqFt

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MLS # 6643836

Property Type Twin Home

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This property provides a great start to a multifamily building.

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265 S Smelter Road Hayden, AZ 85135

$19,000

1 Bed

1 Bath

840 SqFt

Status Active

MLS # 6647911

Property Type Single Family Residence

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This is a great place to create a ranch and have all the off road devices you possibly want. Come take a look at the possibilities today!

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5201 W Camelback Road Phoenix, AZ 85031

$18,000

2 Beds

1 Bath

600 SqFt

Status Active

MLS # 6610629

Property Type Manufactured Home

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***Highly Motivated Seller***55+Park***You will enjoy the spacious feeling in this 2 bedroom 1 bathroom home, a super cute home, and a bargain to boot! This adorable place could be either your primary home or your Arizona getaway! Boasts an beautiful Arizona room, which is where the second bedroom is. The interior of this darling place has been well taken care of, with upgrades galore: New wall unit style AC/Heating units remotely controlled as well in Front room, bedroom and 2nd bedroom. Freshly painted inside recently inside. The refrigerator and dryer stay. Low maintenance yard. Buyer to verify schools. New hot water heater as of Jan 2024! The water and sewer are also included in the lot rent! Lot rent is approximately $855.00, Live in a great 55+ park with many amenities to enjoy. Heated pools and spas, or enjoy your days playing pool or reading from the vast library. The walking and biking path winds through the community. This place is bargain paradise!

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16005 N 32nd Street Phoenix, AZ 85032

$18,000

1 Bed

1 Bath

800 SqFt

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MLS # 6635032

Property Type Manufactured Home

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Seller Financing Available! This one bedroom, one bath is located within the 55+ age restricted community of Paradise Valley Ranch. Freshly painted, this home features central AC and heat, gas cooking and all appliances including W/D. It features two extended covered carports offering privacy and shade. Located at Paradise Valley Ranch 55+ Community operated by Treehouse Communities. Community amenities include, pool, spa, fitness, recreation center, outdoor dining and laundry. The lots are spacious and private.

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