How much house can I afford?
The amount of house you can afford depends on factors like your income, down payment, existing debts, and monthly expenses. Lenders typically recommend that your total housing costs (including mortgage, insurance, and taxes) should be no more than 28-31% of your gross monthly income. Use our mortgage calculator to estimate what you can afford. We’re here to analyze your financial situation and give you a clearer picture of what’s achievable.
What factors determine my mortgage eligibility?
Your mortgage eligibility hinges on several criteria, including your credit score, income, debt-to-income ratio, and employment history. Lenders use these elements to assess how well you can manage mortgage payments. A higher credit score signals responsible financial behavior and can lead to better loan terms, while a steady income assures lenders of your capacity to meet monthly obligations.
What credit score is needed to qualify for a mortgage?
A credit score of at least 620 is often required to qualify for conventional mortgages, though different loan types vary in their requirements. FHA loans, for example, may be available with scores as low as 580. Your credit score impacts not only eligibility but also the interest rate you’re offered, so the higher your score, the better your potential rate.
Get Your Free Consultation
How does my income affect the loan I can get?
Your income plays a crucial role in determining the loan amount you're eligible for, as it directly influences the size of monthly payments you can comfortably manage. Lenders analyze your income to ensure you can handle the financial commitment, typically aiming to keep your monthly mortgage payment within a specific percentage of your gross monthly income. This calculation, known as the front-end ratio, typically ranges from 28-31% for many lenders.
Can I get a mortgage with bad credit?
Yes, even with a low credit score, mortgage options are available. FHA loans, for example, are accessible with credit scores as low as 500 (with a larger down payment) or 580 (with a 3.5% down payment), making them popular among buyers with limited credit histories. VA loans, for eligible military personnel, and USDA loans in rural areas also offer flexible credit requirements. Improving your credit by paying down debt and maintaining timely payments can also increase your access to better loan terms. We can help you explore these options and determine the best approach for your circumstances.
How do lenders calculate my debt-to-income ratio?
Lenders calculate your debt-to-income (DTI) ratio by dividing your total monthly debt payments—such as credit cards, student loans, car payments, and any existing housing costs—by your gross monthly income. This ratio helps assess your ability to manage additional debt from a mortgage. Typically, lenders prefer a DTI below 43%.
Still Have Questions?
At Texas Lending Solutions, we're committed to supporting you through each stage of the mortgage journey. From pre-approval to closing, our experts are here to offer guidance and personalized assistance, helping you make your dream home a reality. Don't hesitate to reach out if you have any more questions.