This is one of the most important questions you can ask about mortgages, and the answer is not a simple one.  When I preapprove you I will let you know how much house you would be qualified for.  But what you can afford is a bigger question.  I look at your income and your required minimum monthly payments on your credit obligations.  But lenders do not take into account your expenses for private school tuition, the cost of vacations, the extra expense of organic and whole foods, saving for retirement, and more.  Ultimately, you have to decide if you actually want the biggest house you can qualify to buy.  A large house payment, which you are qualified for, will limit alternative uses for your money.

A well-qualified borrower could qualify for a house payment that brings their total monthly debt obligations to somewhere between 45% and 50% of pretax monthly income.  For example, with an annual pretax salary of $84,000, or $7000 per month, a well-qualified borrower could qualify for total monthly debt of somewhere between $3150 and $3500.  The total of all of your required payments must not exceed this figure.  To figure your required payments, total your monthly house payment (principal, interest, taxes, insurance and hoa fee), minimum credit card payments, student loan payments, auto loan payments, lease payments, installment loan payments, marital support payments, child support payments, and even IRS tax payment plan monthly payments.

Get preapproved before you begin to shop, so you can make an intelligently evaluated decision about what is going to be right for you.

Here are links to some other information you may find helpful:

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