How To Calculate How Much Home I Can Afford in Grand Rapids

Grand Rapids, MI was voted as one of the top 100 cities to live in America –ranking in spot 21 in 2020 when it comes to economic opportunities. Because it’s so popular, we know many of you are excited to go house hunting right away. But before you do, it’d be helpful to first determine how much you can afford to buy in Grand Rapids, MI.

How much a lender will approve you for a mortgage loan is based on several factors and this article will explore what they are. 

Your Credit Score

Your credit score represents how responsibly you manage your finances so it’s a major factor when it comes to finding out how much home you can afford. Minimum credit score guidelines first determine whether one is qualified or not. Then the score is used to judge what interest rate. The minimum credit score for a conventional loan is typically set at 620 and for an FHA loan, a 580 score can qualify.

Your DTI Ratio

Your debt-to-income ratio (DTI) reveals how much of your income is used to pay your debt and this number is used to estimate your ability to afford your monthly obligations.

Usually, 43% is ideal for loan approval. Anything higher than that will have a hard time getting approved for a mortgage in Grand Rapids. 

Your Down Payment

Your down payment is the amount you pay upfront for your Grand Rapids home and it can be anywhere from 0% or more, depending on the loan program requirements. Typically, 3.5% is what most put down.

Your Annual Salary

Your income is an obvious factor to consider when calculating how much home you can afford. There’s no specific salary range that lenders look for but you will need to verify it with pay stubs, W2s, tax returns, and proof of employment.

For self-employed borrowers, other forms of proof of income are required

Interest Rates

Interest rates can be fixed or adjustable, and vary depending on the amount of down payment you’re giving, your credit score, and more.

Fees Related to Homeownership

You’ll also need to consider the additional expenses that are required as a homeowner, such as property taxes, insurance, maintenance, and HOA dues. 

Next steps to buying in Grand Rapids

Purchasing a home is one of the most significant financial decisions you can make so before taking on this responsibility, it’s best to crunch the numbers to see how much you can afford. 

One of the best ways to get an idea of how much house you can afford in Grand Rapids is to get pre-qualified or pre-approved. Another perk of getting pre-approved with Reliance Financial Group is getting a pre-approval letter. This letter can be used as leverage when negotiating an offer on a home.

Get started today or contact a loan officer from Reliance Financial Group for more information.

 

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.