How to Afford a Mortgage on Your Budget
Owning your own home is a key part of the American dream. But if you've never owned your own home before, you may not know how to get started.
Just because you're currently renting doesn't mean home ownership is that far out of reach. If you're wondering whether you can afford a mortgage on your budget, you may be surprised to find the answer is a resounding “yes!" Here's how.
Costs of home ownership
Being able to afford rent is a good indicator that you might be able to afford a mortgage. But there is more to affording a house than just the monthly payment on your loan. The following expenses are also part of home ownership, and in many cases these costs are factored in to your monthly mortgage payment to your lender:
- Property taxes
- Homeowner's insurance
- Interest on your mortgage loan
- Private mortgage insurance (PMI)
How much can you afford?
Try using a mortgage calculator to find out how much house you can buy. You just need to know which numbers to plug in. Once you determine how much you can afford to pay each month on a mortgage loan, what your interest rate will be, the mortgage period you want (30 years is standard), and your down payment, the Synovus mortgage calculator will tell you what price home you can afford.
Getting yourself financially ready
When you are getting ready to apply for a mortgage, make yourself an attractive candidate by getting your finances in order. Specifically, you'll need some money saved up for a down payment and closing costs, a debt-to-income ratio of 43% or below, and a credit score of 580 or higher.1 The better your financial picture, the more likely it will be that a lender will prequalify you for a mortgage and at a lower interest rate.
We understand that there can be barriers to homeownership for people who don't think they have a sufficient income or who lack the knowledge about how to buy a home. So we offer mortgage loan products to facilitate homeownership for all people. Two products to consider are Federal Housing Administration (FHA) loans and U.S. Department of Veterans Affairs (VA) loans.
Did you know? You may qualify for a government-backed loan with little to no down payment required.
About FHA loans
The FHA helps people get a mortgage by requiring less money down than what's usually required with conventional loans. You can get a government-backed FHA loan with only 3.5% of the purchase price of a home as the down payment, compared with 10% or 20% typically required for a conventional loan. This can make the difference between buying a home now and waiting, possibly several years, to save enough cash.
About VA loans
Veterans, active military, and eligible spouses can buy a home with no down payment at all through this home loan sponsored by the government. With a VA loan, you'll need to meet the military service requirement plus maintain a debt-to-income ratio set by the lender.
Help is available
If you can't afford to buy a home now, you might want to meet with a housing counselor.2 Available at little to no cost through the U.S. Department of Housing and Urban Development (HUD), a housing counselor can help you draw up a plan that puts you on the path to owning a home.
If you think you're ready to be a homeowner now or if you need advice on how to begin the process, contact a Synovus mortgage specialist to talk about your options. We're here to help you achieve your homeownership dream.
Important Disclosure Information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Consumer Financial Protection Bureau, "What is a debt-to-income ratio? Why is the 43% debt-to-income ratio important?" https://www.consumerfinance.gov/ask-cfpb/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791/, accessed August 17, 2018. Back
- Consumer Financial Protection Bureau, "Find a housing counselor," https://www.consumerfinance.gov/find-a-housing-counselor/, accessed August 17, 2018. Back
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Mortgage Basics ebook
This guide can help answer your questions and even tell you how to get prequalified for a mortgage.