Rule of Thumb Qualification Test: How Much Home Can I Afford?

By Frank Lozano, VA Loan Specialist, DirectVALoan.com

Everyday I get a question from a Veteran asking how much home do I qualify for. 

Well, to answer that question clearly and exactly, we would have to check on the credit, income and do a whole work up to find out how much can this borrower really qualify for.  Now most know that when your credit gets checked too many times, lenders hate it and your credit score goes down.  So we don’t want to do that right now right?  So here’s what you do.  Use a RULE OF THUMB for now until you get super serious about getting a VA Home Loan.  Here’ it is;

– Take your monthly net income and times it by 45%. Then subtract your monthly debt service (You min. monthly payment on credit cards, student loans, cars, etc…). 

That’s it!  That’s how much you probably can afford on a monthly payment.  With that info, you can extrapolate on how much of a home you can buy by figuring out the current interest rate and back tracking to figure out that number!  (Yes, Mom, I finally figured out why I had to take Math in High School)

Okay, say you do the Rule of Thumb and now you get a number like $ 1500 per month.  And let’s say that today’s 30 year fixed rate is at 6.50%.  Just go to the HOW MUCH HOME CAN I AFFORD CALCULATOR and get that magic number.  Go for it. Its’ fast and easy!  Give it a Try!