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How
Much
Home
Do
I
Qualify
For?
Income.
Debt.
Down
Payment.
Closing
Costs.
Two
Years
Income
Tax
Returns.
Assets.
Liabilities.
IRAs.
Just
what
can
I
afford?
Buying
a
home
in
today’s
marketplace
is
a
bit
intimidating.
And
your
new
home
purchase
is
likely
to
be
one
of
the
most
important
decisions
you’ve
ever
had
to
make.
Usually
it’s
one
of
the
single
most
valuable
assets
you’ll
own.
Where
to
Start
Before
you
invest
hundreds
of
hours
searching--and
to
avoid
any
heartbreak
if
you
find
yourself
unable
to
qualify
for
your
dream
home--sit
down
with
a
lender.
Your
lender
can
perform
a
simple
verbal
prequalfication
in
about
twenty
minutes
and
a
full-fledged
prequalfication
in
about
5
days.
Pre-qualification
not
only
allows
you
to
focus
your
search
in
the
correct
price
range,
saving
a
lot
of
wasted
time
and
frustration,
but
it
can
also
give
you
an
edge
when
competing
with
other
offers
on
a
home
that
you
find.
If
a
seller
is
deciding
between
two
offers—-yours
who
has
been
qualified
and
another
unqualified
offer,
they
are
much
more
likely
to
pick
yours.
Pre-qualification
will
also
give
you
leverage
when
negotiating
with
a
seller
in
a
non-competitive
atmosphere;
it
essentially
makes
you
a
cash
buyer.
The
amount
of
home
that
you
qualify
for
will
be
determined
by
three
key
factors:
your
down
payment,
your
ability
to
qualify
for
a
mortgage
and
closing
costs.
The
Down
Payment
Whereas
a
current
homeowner
can
rely
on
equity
from
their
home
sale,
a
first
time
homebuyer
is
limited
to
the
money
they
can
save.
The
days
of
having
to
put
20
percent
down
on
a
home
are
in
the
past,
although
putting
a
large
amount
of
money
down
definitely
makes
it
easier
to
qualify
for
a
mortgage
and
to
get
the
lowest
interest
rates
available.
With
the
various
programs
that
are
available
today,
you
can
put
as
little
as
3
percent
down
on
a
home.
Qualifying
for
the
Mortgage
There
are
two
basic
guidelines
that
lenders
use
to
determine
what
size
mortgage
you
are
eligible
for:
1.
Your
monthly
mortgage
payment
of
principal,
interest,
taxes
and
insurance
(PITI)
should
not
exceed
25
to
28%
of
your
monthly
gross
income.
2.
Your
monthly
housing
cost
(PITI)
plus
other
long-term
debt
should
not
exceed
33
to
38%
of
your
monthly
gross
income.
Specifically,
most
lenders
will
consider
4
key
factors
to
determine
your
ability
to
qualify
for
a
home
loan:
Income
–
This
first
element
can
include
not
only
your
gross
monthly
income
and
secondary
income
(commissions,
bonuses)
but
also
your
history
of
employment,
stability
of
income,
education,
even
potential
for
future
earnings.
Credit
History
--
This
encompasses
your
history
of
debt
repayment,
total
outstanding
debt,
highest
balance,
and
your
highest
monthly
debt
balance.
Assets
–
Your
assets
consist
of
cash
on
hand,
savings
and
checking
accounts,
CDs,
stocks,
bonds
or
any
other
type
of
liquid
asset.
Property
–
The
home
you
are
planning
to
purchase
will
be
appraised
to
determine
the
market
value.
The
estimated
value
must
be
sufficient
to
secure
the
loan.
Lenders
will
loan
you
no
more
than
a
certain
percentage
(usually
95%)
of
this
value.
Closing
Costs
Keep
in
mind
that
in
addition
to
your
down
payment,
you
will
also
be
responsible
for
paying
fees
for
the
loan
and
closing
costs.
These
will
be
required
at
the
time
of
closing
unless
you
qualify
and
choose
to
have
these
included
in
your
financing.
Closing
Costs
generally
will
range
between
2
percent
and
6
percent
of
the
mortgage
loan,
depending
on
the
loan
and
lender.
You
will
be
provided
with
a
"Good
Faith
Estimate"
of
closing
costs
so
you
can
know
what
to
expect.
"Points",
which
are
one-time
charges
equal
to
one
percent
of
your
loan
amount,
may
be
required
by
your
lender
at
closing.
Your
closing
agent
will
charge
a
fee
at
the
close
of
the
sale.
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