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How Much House Can I Afford?

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Before you start house hunting, review your finances and determine how much you can realistically pay. Here are some things to consider:


Your Credit

If your credit isn’t up to par, it can be difficult to qualify for a mortgage or get the best loan rate. Before you even glance at home listings, make sure your credit is in line. If it’s a bit low, take some time to build it back up—pay all bills on time, pay off credit cards and other debt, and avoiding taking on any additional loans.
You can review your credit report for free in our mobile app or by visiting You can receive one free credit report every 12 months.


Your Budget

It is important to know how much you earn and spend each month. The general rule of thumb is that your mortgage payment should not exceed 28% of your monthly take-home pay. This means if you make $6,000 each month, your mortgage payment should not be more than $1,680. Additionally, if you have other loans—for example, credit cards or a car loan—you’ll want to make sure that no more than 36% of your gross monthly income goes toward loans and debt payments. A Mountain America credit card can be a great way to consolidate credit card debt and lower interest rates.


Your Savings

The monthly loan payment isn’t the only expense you’ll need to consider when house shopping. Many mortgages require a down payment (anywhere from 3.5 to 20 percent). Do you have enough money saved to cover this lump sum payment? If not, it’s generally a good idea to hold off until you have the savings in hand. You’ll also want to make sure you have enough money to cover the home appraisal, closing costs, moving expenses, taxes and insurance. If you need to buy furniture, make repairs or improve the landscaping, you should set aside funds to cover these expenses. These unexpected costs can add up quickly.

There are many considerations to make before presenting an offer on a home. Knowing you qualify for a home mortgage loan is one of them. Your research should begin with Mountain America Credit Union, a member-owned, not-for-profit financial institution.

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