We keep getting questions e-mailed over to us or called in – “if I make ___ amount per year, what is my budget to buy a home?” Unfortunately, there is no easy answer for you! If you have stuck around here for a while now, you probably already know the answer…it takes more than just a salary to come up with a price range for how much of a home you could afford. While your yearly salary does play a role, it is not everything. There are many other factors that play a role in it. To name a few, the following factors play a part: your credit score, how much of a down payment you can afford, and your debt-to-income ratio. If your salary is up there but the funds you have available for your down payment is very low, your budget will likely be different if your down payment was significant.
There are quite a few online resources available where you can calculate a general estimate of how much of a mortgage you could afford. Be sure you have accurate estimates when questions are asked like your credit score, etc. Most of these online resources will also indicate your expected monthly payment as well.
When you are talking about your monthly payment, do not forget to take into consideration your principal, interest, taxes, insurance, and even homeowner’s association fees if applicable. Some of these online resources do not take those factors into consideration and they are important so you know what to expect to pay. When using a mortgage calculator, see if it includes taxes, insurance, interest rate, etc. You want it to include as much as possible so there will not be any surprises. And obviously you can speak to a lender as well to get even more of an accurate number based on your salary and other factors.