How to Find Your Home Price Range

The first step you want to take when purchasing a home is getting an idea of the price range you can safely qualify for.

You can do so by using a mortgage calculator like the one we have in the tools section.

The second way, and best one, is to get pre-approved. You’ll enjoy two main advantages when being pre-approved:

1. You’ll know exactly what you can afford after considering your earnings, debts and credit rating
2. You can negotiate the purchase of a property from a position of strength. A seller will take you more seriously if you can show them that you have done your homework.

Besides, being pre-approved is FREE, fast, and there is not obligation on your part. If by any chances, your mortgage broker wants to charge you for a pre-approval or is not willing to do it for you, it’s time for you to look for a new loan officer.

As a general rule, you’ll be able to buy a home with a price range 2 or 3 times your annual income.

A more precise way to find out how much you can afford is to look at your monthly income and expenses. You’ll qualify for a monthly payment (including mortgage payment, taxes, insurance and other fixed expenses) equal to 28% of your monthly income. Also, your monthly housing expenses and other long-term debt (debt extending more than 10 months into the future - car payments or credit card debt)should not be more than 36% of your gross (before taxes) monthly income.

However, remember that there are some programs designed to allow you go over those percentages. Some of these programs are Government supported and are designed to help regular people afford a home.

Please take into account that there are three different things lenders consider when deciding on giving you a loan: 

 1- The income and debt ratios to determine your ability to repay the mortgage
 2- Your credit history to find out how likely it is that you’ll repay your loan on time (If your credit rating is poor, we can help you get it better so that you can have a better home loan)
 3- An appraisal of the house to ensure that property offers sufficient guarantee for the home loan

In the following article, we’ll discuss How to Figure Out the Down Payment.