"Figuring out how much house you can afford isn't just about the maximum mortgage a lender approves. While preapproval sets an upper limit, true affordability depends on how that monthly payment fits into your overall finances and long-term plans. A home that looks affordable on paper can still stretch your budget if you don't account for upfront costs, ongoing expenses, and future changes. That's why it's important to look beyond the loan amount and consider the full picture before setting your price range."
"Key factors that shape home affordability include: Your income and employment stability Your debt-to-income (DTI) ratio Your credit score and borrowing profile , term length, and interest rate Upfront cash requirements and ongoing housing costs Personal goals, lifestyle needs, and future plans Understanding how these pieces work together can help you choose a home price that feels sustainable-not just today, but years down the road."
Preapproval sets an upper mortgage limit but affordability hinges on whether the monthly payment fits within personal finances and long-term goals. Upfront costs, ongoing housing expenses, and future changes can make a seemingly affordable home unaffordable. Key factors include income and employment stability, debt-to-income ratio, credit score and borrowing profile, loan term and interest rate, and required cash reserves. Lenders typically use gross monthly income for qualification while net income matters more for personal budgeting. The DTI formula compares total monthly debt payments to gross monthly income. Lender approvals represent maximums, not necessarily comfortable payments.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
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