Frequently Asked Questions
There are four main factors that go into calculating how much you can afford: monthly income, monthly expenses, credit score, and extra savings that can cover closing costs and down payment.
We give you a safe price range that you can comfortably afford based on the information you provide about your savings and expenses. But, make sure you’re also saving up for future life plans, like new additions to family or buying a new car.
At HomeLight, we’re dedicated to providing you with the tools to make the home ownership process easy. If you still have questions about whether it’s the right time for you to buy a home, we recommend speaking with a licensed financial advisor who can help you assess if now is the right time for you
You’ll need to consider a couple of things before you can answer this question. Where do you want to live and do you see yourself living in this area for more than four years? What’s the purchase price of the home you’re looking at and do you have enough savings for the down payment? What are the current interest rates and term of the loan?
But, the most important question to ask yourself is, are you prepared to take on the full responsibility of homeownership? You need to make sure that you can handle the costs of owning a home, such as property taxes and home maintenance fees in addition to your monthly mortgage payments.
Our home affordability calculator can help you figure out what is healthy range for your situation and budget. From there, you can determine whether renting or buying is the safest financial option.
It’s common advice that you should put 20% down on a home.That way, you’ll have more equity in the home right off the bat and you’ll pay less for your mortgage each month. However, there are lending options that go as low as 3.5% (FHA loans) on down payments. How much you should put down depends on your financial situation, income, and credit score. Use our affordability calculator to find out how much you can afford to pay.
Here’s the equation for mortgage payments on fixed-rate loans:
Monthly Mortgage Payments = P[r(1+r)^n/((1+r)^n)-1)]
P: principal (initial amount borrowed)
i: monthly interest rate. Lender typically list interest rates as a yearly figure. So, if the rate this year is 3.5%, divide that by 12 (months per year), and you’ll get: 0.035/12 = 0.002917
n: # of payments you’ll have over the loan term. On a 30-year fixed rate loan, n = 30 years * 12 months per year, which is 360 payments over the loan term.
