Understanding Your Home Buying Budget

Buying a home is one of the biggest financial decisions you’ll ever make. But how do you determine how much home you can afford without stretching your budget too thin? At BrightSide Lending, we believe in helping you make smart, informed choices about your mortgage. This guide will walk you through a step-by-step calculation to estimate your home affordability and ensure you’re financially prepared for homeownership.

Step 1: Understand the 28/36 Rule

Lenders typically use the 28/36 rule to determine mortgage affordability:

  • 28% of your gross monthly income should go toward housing expenses (mortgage, property taxes, homeowners insurance, HOA fees).
  • 36% of your gross monthly income should cover all debts, including your mortgage, credit card payments, student loans, and car loans.

Example:

If you earn $6,000 per month, your max mortgage payment should be around $1,680 (28%), and total debts should not exceed $2,160 (36%).

Keep in mind this is recommended to set up you up to be a successful homeowner. You can qualify for more with max debt to income ratios capping off at about 50% on conventional and 57% on FHA, but it is important to review your budget to make extra sure you can afford your housing payment.

Use our Mortgage Calculator to get a precise estimate!

Step 2: Factor in Your Down Payment

Your down payment directly affects how much you can afford. A higher down payment means a lower mortgage amount, reducing your monthly payment.

Common Down Payment Options:

  • Zero Down: VA, USDA, and some down payment assistance programs allow this
  • 3-5% Down: FHA loans or conventional loans with PMI
  • 10-20% Down: Avoid private mortgage insurance (PMI)
  • 20%+ Down: Lower payments, better loan terms

How It Affects Affordability:

If you have $40,000 saved, you can afford a $400,000 home with 10% down or a $200,000 home with 20% down.

Not sure how much you need? Call us at [Your Phone Number] to explore down payment assistance programs!

Step 3: Consider Your Interest Rate & Loan Term

Your mortgage interest rate significantly impacts your monthly payment. Rates depend on factors like credit score, loan type, and market conditions.

Example Payment Breakdown (Based on a 30-year fixed mortgage, 7% interest rate):

  • $250,000 home, 20% down: ~$1,330/month
  • $400,000 home, 10% down: ~$2,680/month
  • $600,000 home, 20% down: ~$3,987/month

Tip: Check today’s rates with BrightSide Lending’s Rates and see how much you qualify for!

Step 4: Don’t Forget Additional Homeownership Costs

Beyond your mortgage payment, consider: ✅ Property Taxes – Varies by location ($200-$1,000/month) ✅ Homeowners Insurance – $100-$300/month ✅ HOA Fees – If applicable ($50-$500/month) ✅ Maintenance & Repairs – 1% of home value per year

Get a free mortgage consultation today! Call [586-270-5070] or Apply Online  to get started.

Step 5: Get Pre-Approved Before You House Hunt

A mortgage pre-approval helps determine your actual budget and gives you a competitive edge when making an offer.

🔹 Why Get Pre-Approved?

  • Know your exact home affordability range
  • Get accurate mortgage rate estimates
  • Show sellers you’re a serious buyer

🔹 What You Need to Apply: ✅ Proof of income (pay stubs, tax returns) ✅ Credit score (above 620 preferred for best rates, however we can accommodate as low as 500) ✅ Debt & asset statements

Ready to get pre-approved? Click Apply Now or call [Your Phone Number] for personalized assistance!

Find Your Perfect Mortgage with BrightSide Lending

Understanding how much home you can afford is the first step in your homeownership journey. At BrightSide Lending, we simplify the process and offer expert mortgage guidance tailored to your needs.

📞 Have questions? Our team is here to help! Schedule a free consultation today.