How Much Can I Afford

Generally, lenders will allow a borrower to use 45% of their gross monthly income to qualify, subtracting any monthly liabilities. It is important to remember that this approval calculation is only from an income standpoint and does not take into account a borrower’s credit and asset qualification.

Example:

Borrower 1: ($45,000 per year / 12 months) = $3750 per month
Borrower 2: ($35,000 per year / 12 months) = $2917 per month

Total Monthly Income: ($3750 + $2917) = $6667 per month

Maximum Monthly Expenditure: ($6667 * 45%) = $3000

Currently Monthly Liabilities: (Car $250 + Car $300 + Student Loan $200 + Credit Card $50) = $800 total month liabilities

Maximum Housing Expense: ($3000 – $800) = $2200 (PITI)

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