When you are a first time home buyer, or even if you have purchased a home before, one of the most important factors to consider is home affordability. There are a lot of things that contribute to the cost of a home, including the price of the home, the interest rate of your mortgage, the length of your mortgage, property taxes, and homeowner's insurance.

It can be difficult to determine how much house you can afford, but there are some general guidelines that can help. A good rule of thumb is that your monthly mortgage payment should not be more than 28% of your gross monthly income. This includes not only the principal and interest on your loan, but also property taxes and insurance.

Another way to determine affordability is to use a housing affordability calculator. There are many different online calculators that can help you input different factors and come up with an estimated monthly payment. This can be a helpful tool in determining what you can afford, but remember that it is just an estimate and there may be other costs associated with purchasing a home that are not included in the calculator.

Factors That Affect Home Affordability

There are a lot of factors that affect how much house you can afford, and it is important to take all of them into consideration when making your decision.

The first factor is your Income. Obviously, the more money you make, the more house you will be able to afford. But it is important to remember that your mortgage payment should not be more than 28% of your gross monthly income. So if you make $5,000 per month, your mortgage payment should not be more than $1,400 per month.

The second factor is the interest rate on your mortgage loan. The lower the interest rate, the lower your monthly payments will be. However, you may have to pay points upfront in order to get a lower interest rate, so be sure to factor that into your decision as well.

The third factor is the term of your loan. The longer the term of your loan (30 years vs 15 years), the lower your monthly payments will be. However, you will end up paying more interest over the life of the loan if you choose a longer term. Using a mortgage calculator with additional payments will help you determine interest and time saved by making additional monthly payments on your mortgage

The fourth factor is property taxes and insurance premiums. These will usually be included in your monthly mortgage payment along with the principal and interest on your loan. However, if they are not included in your payment they will need to be paid separately and should be taken into consideration when budgeting for your new home purchase..

There are a lot of things that go into determining how much house you can afford. It is important to take all of these factors into consideration when making your decision so that you do not end up being house poor and unable to enjoy your new home because all of your money is going towards paying for it.. Use this guide as a starting point in determining what you can afford and then shop around for different lenders to get pre-qualified for a loan so that you have a better idea of what kind of budget you are working with.. Good luck!