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Buying a home

Buying a new home is often both a financial goal and a major event in your life. A house is one of the biggest investments you'll ever make and one you'll probably live with (and in) for years to come. Finding the right home — one that fits your personal style, housing needs and budget — takes time.

Find your price range

How much house you can afford directly affects how much credit a lender will extend to you and vice versa. Read more to learn about baseline affordability measures, how your credit report and credit score may impact how much you can borrow, and what the debt may cost you based on the interest rate for which you qualify.

Calculate your cash flow

Beyond a down payment and closing costs, the real key to affordability is monthly cash flow — what you must pay every month to own a home and live in it — compared with your monthly income. Here’s a calculator to estimate what lending professionals call your debt-to-income ratio.

Enter monthly payment in whole dollar amounts
Mortgage payment* or rent
Car payment
Student Loans
"Minimum" credit card(s)
Child support/alimony
Other personal loans/obligations

Gross monthly income

Your debt to income ratio, expressed as a percentage, is: 0%

*A monthly mortgage payment consists of principle, interest, taxes and insurance.

Apply for loan pre-approval

Once you take account of your income and cash flow situation, you’ll have your own estimate of what you can comfortably afford to spend. Your next step is to talk to potential lenders and apply for a mortgage loan pre-approval.

This is a critical step because a lender analyzes your credit and indicates what amount they are willing to lend to you.

A pre-approval gives you a more accurate idea of what you can afford. When the time comes to make an offer on a home, it’s likely that your agent will want a pre-approval letter to accompany the offer.

Get a more accurate idea of what you can afford