How Much Income Do You Need to Buy a House?
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If you’re in the market for a new home, chances are you’ll have to compromise at some point along the way. Maybe you’ll have to commute a little farther than you’d like in order to get the best value for your money. Or perhaps you’ll forgo a huge backyard to be closer to the city.
And when it comes to finances, you might find a disparity between how much house you want and how much house you can purchase given your gross monthly income and other factors.
Home loans are made against your ability to repay. While the mortgage loan is secured against the house, it is really made against your income. That’s what mortgage lenders look for — income to offset liabilities.
Simply put, the amount of income you need to purchase a house will vary by your payment comfort level, including any other monthly debt obligations you might have.
Mortgage payment: Principal, interest, property taxes insurance and mortgage insurance, if needed
Consumer debts: Minimum payment obligations on things such as auto loans, credit cards, student loans, personal loans and installment loans
Other debt obligations: Alimony and/or child support or any other court-ordered repayment obligations