What's an Estimate of a Monthly Mortgage Payment I May Qualify For?

Hello Hampton Roads,

If you are thinking of buying a home and want to know how much of a monthly mortgage payment you can qualifyfor, the 28/36 rule can help! The 28/36 rule is a measure of the percentage of your DTI (debt to income) that lenders use to determine how much they'll allow you to borrow. It's a conservative estimate as many loans allow you to have a higher DTI but this is a good rule of thumb to give you an idea.

Here's how it works:

Lenders prefer to see no more than 28% of your gross monthly income towards housing expenses and no more than 36% of total debt including housing against your gross monthly income.  For example if the gross monthly houshold income is $5000 then no more than $1400 ($5000 x.28) can be used for housing costs and no more than $1800 ($5000 x.36) can be used for total debt including housing. 

Still using the example above, if 28% equals $1400 and additional debt excluding housing is $600 then $1200 ($1800-$600=$1200) is available for housing payments.   If houshold debt excluding housing, is $400 then $1400 ($1800-$400=$1400) the full 28%  is avilable for housing payments.

Certain loan programs allow DTI ratios up to 50% but if you keep to the 28/36 rule of thumb you won't feel overextended or house poor. Given that mortgage rates are in the mid 5's and expected to go higher, its important to stick to an affordable housing payment

If you have any questions about the home buying process or would like to know how much you may qualify for, feel free to schedule a call.

 

Thanks for Reading,

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