Westlake Village Ca Real Estate, How Much Home Can A Buyer Afford?

Westlake Village Ca Real Estate, How Much Home Can A Buyer Afford?

To buy a home, a buyer will need up-front money called a "down payment." In order to find how much home a buyer can afford it is important to know the upper end limit of affordability. You won't necessarily buy the most expensive home you can afford, but you still want to know what your upper limit is. The last thing you want to do is waste your time looking at homes you can't afford, and you also don't want to pass up homes you thought you couldn't afford but which might actually be within your reach.

Most people can afford a home that costs up to three times their annual household income, if they can make a 20% down payment and have only a moderate amount of other debt. If you have little to no debt and can put 20% down you can probably buy a house worth up to four times your annual income. Since you pay for your house with a combination of a down payment and a bank loan, the total of both is the cost of the home:

Down Payment + Upper Limit of Loan Approval = How Much Home You Can Afford

Again, an emphasis on staying conservative is always the safer route to take when buying a home. I never encourage buyers to offer at the highest approval limit unless they insist their financial circumstances will support it.

While a 20% down payment is always best and will gain a buyer the better interest rates, there are FHA loans available with requirements of only 3.5% down payment.

To find out how much home you can afford contact your local financial institution. A major lender such as Wells Fargo, Bank of America, Chase or CitiBank is a good place to start. Ask for the home loan division. If you need referrals for the Conejo Valley area, I will be happy to provide them. You may contact me by email at homes@cherylclayton.com.