December 1, 2017


It is easy to feel overwhelmed by all the decisions that go into buying a new home. After all, a home is a big purchase that you will have for many years to come. With all there is to consider, don't forget the one question most important for home buying success: Can I afford it?


When figuring out what kind of mortgage payment one can afford, factors such as taxes, insurance, and other expenses should be included.

Lenders generally base mortgage decisions on these 5 factors:

  • Income Stability - income that can be verified and has a 2 year history
  • Debt-to-Income Ratio - Lenders prefer that the proportion of your combined debt and housing expense be no more than 36% of your income
  • Loan to Value -lenders often like to see your loan amount at 80% of the value of your property or less
  • Property Appraisal - a professional assessment of your property worth
  • Credit History - a report of your payments habits that the lender will review


When buying a home, you need to have your budget in mind and know what kind of monthly payment that you would feel financially comfortable with. Be sure to consider your desired lifestyle, whether it is a yearly family vacation or private education, you don't want to sacrifice the quality of your life just to funnel as much cash as possible into a single financial goal. Once you have your future monthly mortgage payment calculated, you can visit to help you understand what home price point you can afford to buy.

What kind of home are you looking for? It may be helpful to make a list of your must haves, e.g., three bedrooms, two baths, etc, and also make a list of features you want in your new home. This will help you stay focused and insure you get the home you need at a price that’s right for you.


As your Northeast Indiana real estate experts, the Realtors® of Mike Thomas Associates know that it can be quite a challenge to find the home of your dreams while keeping within your budget. There are many factors to consider, so call our professional team and let us help you take the guess work out of home buying.


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