How Much Home Can I afford?Friday, October 11, 2013 - Article by: sharon duffy - 7th Level Mortgage -
When a mortgage lender calculates a home buyer's maximum home purchase price, it doesn't actually consider the purchase price of the home. More importantly, it looks at the buyer's expected mortgage loan size and the current mortgage rates to determine the expected monthly mortgage payment, including escrows,and then compares that figure to the buyer's monthly income.
This comparison is known as the Debt-to-Income Ratio. All borrowers must meet this ratio for the loan program he is applying for.