Purchase Home

[PerDev]

How many percentage of your reqular income you can give for your House loan.. Would it be 20%, 30% or more ?

[Gene]

Originally Posted by PerDev

How many percentage of your reqular income you can give for your House loan.. Would it be 20%, 30% or more ?

A rule many lenders use in determining if a borrower qualify for a loan is that usually a loan can be considered if the amount to be borrowed is equal to or less than two or two and one half times the annual income of the borrower.

If you take this amount and calculate a payment you can determine what percentage of your income the house payment equals.

[1000feet]

I believe the maximum payment many lenders in north america would look for is around 30-35%... but you also have to consider things like property taxes and heating, and your total debt payments (which may have to be under 40-45%). Of course, that's only what you CAN get - you need to decide how much you want to pay.

[Doku]

When people ask me this question, I generally reply: Use a mortgage calculator to figure it out, but try to keep it to one weeks pay, two tops.
Many lenders will gladly extend more credit than that, but that is what has caused the "mortgage crisis" that is happening now.

[smartile]

Hi PerDev,

When my wife and I bought our house over a year ago we didn't look at percentages. We knew what house we wanted and knew that we didn't want to sacrafice our lifestyle just to pay for the house.

At that time I was still in the early phases of growing my business so we didn't count on that income. Since we didn't have any additional earnings coming in, we had to get creative <literally>.

We started out by writing a description of the exact house we wanted. Once that was done we began to get ideas on how to make the purchase affordable. In the end we were able to find the exact house we wanted without any change in our expenses.

We could afford this new home because we rent the basement out; Currently, we rent the basement for $800/month.