Getting Started
Before you do anything else, ask yourself if you’re ready to buy a home. There are several variables to consider—financial and otherwise—before you take the plunge. Here are a few points to consider:
- Understand your debt-to-income (DTI) ratio. Your DTI is all your monthly payments divided by your gross monthly income. This will determine your ability to get a mortgage. Each mortgage may have their own DTI requirements. To see how much house you can afford, you can use an affordability calculator to do all the math for you. You can also talk with a CityWorth mortgage loan officer to understand what loan programs are best for you.
- To calculate your DTI, add all your monthly payments and divide them by your gross monthly income. Your gross monthly income is the amount of you have earned before any taxes or deductions are taken out.
- Example:
- You have the following bills
- $1,400 per month for rent
- $250 per month for your car loan
- $200 per month for your minimum credit card payments
- $100 per month in student loans
- Total is $1,950 ($1,400 + $250 + $200 + $100)
- You have a gross monthly income (before taxes and deductions) of $5,850
- Your DTI would be 33% ($1,950 / $5,850)
- You have the following bills
- Consider your current lifestyle and your anticipated future lifestyle.
- What do your five, ten, and 20-year plans look like?
- Look at the trends of market values and the cost of other necessities such as schooling, food, extracurriculars, tax rates, etc.
- Are you planning to expand your family?
- How long do you hope to live in your chosen area?
- Assess your present financial standing and future financial goals. Are you financially stable?
- What can you afford now, and how will your plans impact your goals for saving versus spending?
- Are you prepared to take on the commitment and responsibility that comes with owning a home?
- If you would like to explore ways to afford a larger home without increasing your monthly payment or upfront costs, consider our DubbleUpp program