There are a variety of opportunities in the Greater Phoenix real estate market for both buyers and sellers. If you're a prospective buyer click here for a full home search, or if you're considering placing your home on the market, get a free home value report, right here.
One question we get all the time is how mortgage lenders determine how much of a home you can afford. When it comes down to it, there are really 4 criteria that lenders look at to determine this - they are what we like to call "The Big 4":
- Credit Score:
- Credit scores have a broad range of about 500-600 points. The higher the number the better. Anything over a 700 is going to get you the lowest interest rate and the lowest down payment. Even if your credit score is not perfect, there are still options for you to explore in terms of getting a good loan.
- Debt-to-income ratio:
- Your debt-to-income ratio is a figure determined by how much money you owe vs. how much money you make. For example, if your debts are $3,000 a month and your income is $6,000, your debt-to-income ratio is 50%.
- Down Payment:
- Depending on the criteria, your down payment may affect your interest rate, as well as your monthly payments.
- Income:
- The single biggest factor mortgage lenders look at is income. Simply put, the more income you have, the more home you will be able to afford.
