The decision to buy a home is exciting yet daunting, especially if you are a first-time homebuyer. Finding the right home within your budget can be a stressful process. The first step is to determine how much mortgage you can afford. In Southern Maryland, many factors contribute to the cost of a home, making it essential to grasp what you can spend. In this article, we’ll guide you on how to calculate your expenses so you can make sure you can afford your mortgage repayment.

 

Start With Your Gross Income

Your total earnings are the first consideration when determining how much mortgage you can afford. The rule of thumb is that monthly mortgage payments should not exceed 28% of your total gross monthly income. Therefore, if your gross income is $8000 per month, the maximum amount that should be spent on mortgage payments should not exceed $2240.

 

Calculate Your Monthly Expenditures

After calculating your gross income, you need to calculate your monthly expenditures before deciding how much mortgage you can afford. When calculating expenses, include all other existing debts that you may have. These could be car payments, student loans, credit card debts, and any other personal loans. A mortgage lender may also want to know your financial commitments such as child support, alimony, or spousal support before finalizing your loan request.

 

Determine Your Affordable Mortgage Range

With your gross monthly income and expenses in hand, you can now determine how much mortgage you can afford. This calculation is not as hard as it seems, and you can easily accomplish it using various online calculators. Financial institutions and real estate platforms have calculators that can help you determine the price range of homes that you can realistically afford based on your total income and monthly expenditures.

 

Consider a 20% Down Payment

A 20% down payment should also be considered when purchasing your first home in Southern Maryland. Although having a lower down payment may seem like a good option, it results in higher mortgage rates and can increase your monthly expenses. Financial advisors recommend a 20% down payment because it helps keep your mortgage repayment costs down, which will help lower your total debt over time.
Buying a home is a significant decision, and choosing the right one based on what you can afford is crucial to your financial stability. In Southern Maryland, several factors influence the cost of a home, making it important to determine what you can afford before even beginning to go house hunting. Remember to keep your mortgage payment within 28% of your monthly gross income, and consider a 20% down payment when buying your first home. With these tips, you can make your homebuying journey more manageable and ensure financial stability in the long run!

 

If you’d like to get pre-approved for a mortgage, you can do that here. I’d also be happy to recommend some experienced, local Realtors to help you in the homebuying process. Just reach out to me — you can find all of my contact information at https://www.teamhalbert.com/