Guide to Buying a Home March 2014 | Page 3

Preliminary Financing Concerns Most homebuyers find that they need to finance at least part of their home purchase. Therfore, the first stage in finding the right  home is to review your personal financial situation and make an informed estimate of your true purchasing power. Your purchasing  power will depend on: • Your Income • Your Credit Rating • Other Monthly Expenses • Your Down Payment • Available Interest Rates How Much Home Can You Buy? The next four steps discussed will help you review home financing and get you prepared to speak in detail with a lender. A more  thorough overview of the financing process is covered later in this guide. Step 1: Make a rough estimate of how much home you can afford based on your income. Here are a few methods that will give you an approximate starting point for how much home you can afford. Method1: The price of your home shouldn't be any more than 2.5 times your annual salary. Annual Salary Maximum Home Value Annual Salary Maximum Home Value $50,000 $125,000 $110,000 $275,000 $60,000 $70,000 $150,000 $175,000 $120,000 $130,000 $300,000 $325,000 $80,000 $90,000 $200,000 $225,000 $140,000 $150,000 $350,000 $375,000 $100,000 $250,000 $160,000 $400,000