What Mortgage Can I Afford?

1) Start with your “comfortablepayment”

Forget the price tag at first. Pick the monthly number you can live withon your most expensive month (holidays, travel, kids’ sports). That becomesyour guardrail.

Math:

• Add up monthly debts on your credit (car, cards, student loans).
• Choose a comfort DTI (many buyers like ≤ 40%). Some will want lower if     monthly income is higher
• Gross monthly income × DTI − current debts = target mortgage payment (including     taxes/insurance/HOA).
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2) Price the whole payment (notjust the rate)

Build your budget with PITI:

• Principal & Interest
• Taxes
• Insurance
      Plus: HOA/condo dues, mortgage insurance (if <20% down), utilities, and     a maintenance cushion (1–2% of price/year for a house).
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3) Pick a loan structure that fitsyour timeline

(0 points): Lowest cash toclose; flexible if you might sell or refi in a few years.

• Discount points: Pay upfront for a lower rate for the life of the loan. Use break-even:     points cost ÷ monthly savings = months to make it worthwhile.
• Temporary buy-down (e.g., 2-1): Lower payment in years 1–2, then resets. Great if you can fund it     with a seller credit.
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Ask us for a comparison side by side: 0 pts vs. 1-point vs.2-1—showing cash to close, monthly payment, and 5-year cost.
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4) Down payment truths

You don’t need 20% down to be competitive. Plenty of solid options existwith 3–10% down. What wins offers: a fully underwritten approval, cleanterms, and a smart credit/buy-down plan—not just a big down payment.
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5) Remote-work reality check

If you commute 2–3 days/week, a slightly longer drive might trade for abetter price and payment. Homes with true workspace (a door that shuts) stillresell and rent better. Factor Wi-Fi, parking, and transit into the monthly.
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6) Four steps to be offer-ready in 2weeks

1. Docs in one place: W-2/1099s, pay stubs, bank statements, tax returns if needed.
2. Full underwriting (not just pre-qual) for real certainty.
3. Choose the structure: ) 0pts vs. points vs. 2-1 with break-evens labeled.
4. Neighborhood  reps: Tour 3 areas mid-week and at night; track days-on-market and price     cuts to target a seller credit for your buy-down.

Mini examples

• First-timer, 7-year horizon: 2-1 buy-down funded by seller credit can smooth the early years and     keep your emergency fund intact.
• Move-up, overlapping homes: Skip points, conserve cash, and negotiate a seller credit to offset     carrying costs.

Common pitfalls (skip these

• Budgeting with P&I only (forgetting taxes/insurance/HOA).
• Paying points without knowing if you’ll hit the break-even.
• Big credit changes during escrow (new car/furniture = risky).
• Assuming “20% or nothing.”

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