Finance Your Home

How Much Can You Afford

Ideally, you will want to come up with at least 20% of the value of your new home as a down payment, to avoid things like mortgage insurance payments. But, you probably qualify for plenty of financing arrangements that will get you into a new home for as little as 3% of the asking price.

Let's say your gross income is $4,000 a month, and you have $400 a month in debt payments. The rule of thumb is that they'll allow you to pay 29% of your gross income toward your mortgage payment every month. This is known as the front-end ratio. In this example, 29% of $4,000 is just under $1,200 a month -- so, they'll reason, you can put $1,200 toward your mortgage payment.

Your debt ratio, or back-end ratio, on the other hand, is $400/$4,000, or 10%. That's not bad. They don't want more than 41% of your gross income going to total debt -- mortgage, credit card interest, and other payments -- and in this case you're paying 39% towards that purpose. (These ratios can vary somewhat; the ones given here are just examples).

Shopping For A Loan

There are thousands of mortgage lenders across the country, each with many different loan products. From lenders that will only sell to the most creditworthy borrowers (at the best interest rates), to lenders that will lend 50% of a property's value (at high interest rates), there's a mortgage product for just about everyone.

At United Home Construction, we will assist you with any questions regarding financing and attaining a home loan. We are affiliated with several certified brokers in Southern New England and will help you find the best mortgage for you.

If you have any questions about getting a home loan, feel free to contact us.

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