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How Much Home is Affordable?

Most mortgage companies use qualifying rations to determine how much they will lend you. Two common ratios used are 28/36 and 29/41.

The first number in the ratio represents the percentage of your monthly gross income (income before any deductions) that the lender would consider acceptable as a monthly mortgage payment. For example, if you make $2,500 per month, the bank may consider a $700 (2,500 x .28) per month mortgage payment including principal, interest, taxes, and insurance.
 
The second number in the ratio considers your debt. Your total debt should not exceed this percentage of your gross income. For example, if you make $2,500 per month, as above, the bank may like to see your total debt under $900 (2,500 x .36) per month.
 
The more debt you have, the less you typically qualify for.
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