In addition to your monthly mortgage payments, there are many things to factor in when determining how much you can afford, or even if you can afford to buy a home at all. There is a down payment for the loan, closing costs, moving expenses, plus purchases and maintenance for the new home.  It could vary depending on how much you have as a down payment, your debts, financial situation, and credit history/rating. Your debts, including alimony and child support, should not be more than 30 to 40% of your gross income. 

Monthly Mortgage Payment 

Lenders want to make sure you have the ability to pay your loan. As a general rule of thumb, you can figure that your monthly mortgage payment should be equal to or less than 25% of your gross monthly income. This also will vary depending on circumstances. 

Amount of Money Needed 

You will need money for a down payment and closing costs, plus any move related expenses and maintenance or repair costs for your home. VA loans do not require a down payment. You can Negotiate with some Sellers to pay a portion of your closing costs. There are also USDA Rural Development Home Loans with no Down Payment.

   »  Down Payment – Your down payment is a percentage of the property value and is usually from 3 to 20%, or more if you want a lower loan amount. This can vary by the type of mortgage you obtain. Also, if your down payment is less than 20%, you may be required to pay mortgage insurance (PMI or MI). VA loans require no down payment and no mortgage insurance.

   »  Closing Costs – these are settlement costs involved in purchasing your home. They range from 2 to 7% of the property value and include such things as points (a percentage paid for securing a particular interest rate), financing fees, taxes, title insurance, pre-paid and escrow items, and your down payment. You will receive an estimate of these costs prior to closing. I will give you a rough estimate for your closings costs will be before you ever make an offer on a house.

Ready to buy your new home in Niceville, Destin or the surrounding areas? Contact Bruce Griffy to discuss your goals and how LPT Realty can achieve them,