Before you start shopping for a new home, it helps to know the price range to shop in. You don’t want to fall for a particular home, only to realize afterwards that the monthly mortgage payment is straining your finances. This worksheet helps you determine what you can afford based on the numbers lenders use to assess your financial wherewithal. Some things to keep in mind: Raising your monthly income isn’t easy, but you can afford more house by paying off debts beforehand, particularly credit card debt. Find a lender you trust with a good reputation. Don’t get caught up in a low rate from an online lender, only to discover the loan doesn’t work out when it comes time to close.
After you’ve determined what monthly payment you can afford and the approximate interest rate you’ll secure, use this grid to determine the approximate amount you’ll be comfortable spending on a home. Don’t forget to factor in your down payment. The grid below only applies to what you actually need to borrow.
For a more specific estimate of monthly payments, click here to Calculate Your Mortgage Payment using Old National Bank's Mortgage Calculator.