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How do I figure out how much I can afford?

Mortgage lenders calculate affordability based on information such as your income, debt expenses and size of down payment.  A general guideline for Genisys Mortgage lenders is to keep your monthly housing payment (principal, interest, taxes and insurance) at or below 25 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio".   

Lenders also calculate your overall debt to income ratio. It includes all debt commitments, including car loan, student loan and minimum credit card payments, together with your house payment. An overall debt to income ratio of 43 percent or less is preferred.

Try our Mortgage payment calculator to help determine what you can afford.

While the mortgage lending guidelines are a good place to start, consider how your lifestyle affects how much of a mortgage you can take on. For instance, if you send your children to a private school that is a major expense that lenders don't typically take into account. Do you like to spend a lot on dining out, clothes or annual vacations?  All of these things can have a significant impact on how much you can afford in a mortgage.  Be sure to give yourself a financial cushion.   As a homeowner, you will face unexpected expenses, such as a leaky roof or a failed water heater, and routine maintenance.  These things may affect your ability to pay your mortgage if you take on a payment that is too high.

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