| That's the big question. | | | | amount of money you have to spend in mortgage |
| The Answer: How much of a first time home | | | | payments. |
| mortgage you get approved for depends, first and | | | | The figure you get at step 4 above, is your down |
| foremost, on how much you can afford. | | | | payment plus closing costs. |
| And what you can afford depends on:a) How much | | | | But that's not all. |
| you can reasonably pay each month (or week)b) How | | | | How much mortgage you get approved for also |
| much money you have upfront, to pay as a deposit | | | | depends on how confident your lender feels that you |
| (down payment)c) Whether you have enough cash to | | | | will continue to repay your mortgage until it ends. |
| pay for the professional services you use when | | | | This confidence - or lack thereof - is based on:a) Your |
| buying a house (closing costs) | | | | credit history and profile. So if with the loans and credit |
| Here's a simple way of working out how much | | | | cards you already have, you always make your |
| mortgage you can afford: | | | | payments on time, it's a good sign that you will continue |
| 1. Add up all your income | | | | to be consistent with your mortgage. Also, the actual |
| 2. Add up all the money you spend (less rent if you're | | | | amounts of money you have left to pay off on your |
| paying rent at the moment) | | | | loans and credit cards, matter.b) Your employment |
| 3. Take your total spend (step 2 above) away from | | | | situation. The less likely it is that you will become |
| your total income (step 1 above) | | | | unemployed, the happier mortgage lenders will be to |
| 4. Add up all your savings and any gifts of money. | | | | take a risk with you. |
| The figure you get at step 3 above, is the maximum | | | | |