In order to calculate how much home you can afford, the lenders will take the gross income shown on your tax returns (if you are self employed it would be the average of the last 2 years net income) divided by 12 to obtain your monthly income. Once you have your monthly income, multiply by 45% and substract the montlhy obligations shown on your credit report such as car payment and credit cards minimum payment. The result will be the maximum that you can pay for your new home with everything included: Principal, Interest, Taxes, Insurance and HOA of applicable.
Here's a table to give you an idea of the loan amunt at different interest rates. Add mortgage insurance, home owner's insurance, property taxes and HOA if applicable to get the total payment.
Here's a table to give you an idea of the loan amunt at different interest rates. Add mortgage insurance, home owner's insurance, property taxes and HOA if applicable to get the total payment.
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