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Qualifying
Want to see if you qualify? Fill out our
Online Credit Application form, and someone at
Eichelberger Realty will get back to you as soon as possible.
The process of qualifying for a loan is simply determining how
much money you can afford to spend monthly on a home. This page
deals solely with the amount of money you will qualify to spend.
This site has information on such items as credit
issues and down payments. Please
refer to those pages as well for more information.
Each and every first time buyer program has its own guidelines
for determining what you can afford to spend. There are some general
rules that you can use to figure out how much you can afford on
a new house.
| Example
1: 29% Gross Income |
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For this example, your monthly payment cannot exceed 29%
of your monthly income. To figure this out, first determine
your gross monthly income. (Keep in mind there are more than
four weeks in a month, see note at bottom of this page.) So
take your weekly pay and multiply it by 52 weeks to get a
gross annual pay. Then simply divide by 12 for your gross
monthly income. Let's say for example that you came up with
$2,500.00.
Then you multiply 29% (.29) by the gross monthly income.
You will get $725.00. This method shows that your monthly
house payment can not exceed $725.00. Also keep in mind that
this is only the first of two methods, and you must qualify
for both.
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| Example
2: 41% All Bills Combined |
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For the second method, your monthly payment along with all
of your other bills can not exceed 41% of your gross monthly
income. When you include all of your other bills, this only
means your credit. Your credit would include car loans, minimum
payments due on credit cards, student loans, etc. Do not include
rent, utilities, insurance, pagers, car phones, or any other
such bills. So now you need to determine 41% of your monthly
gross income. Let's use the same example as above ($2,500.00).
$2500 * .41 = $1,025.00
Multiply $2,500 times .41 and you will get $1,025.
Now you add up your other bills. For Example:
$175 Car payment
$70 min. payment on credit card
$185 loan for furniture
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$430 total
Now you subtract the bills from your gross monthly income
to determine what you can afford.
$1025 - $430 = $595.00
This method shows that you can afford a monthly house payment
of $595 per month.
You can only use the lesser one of the two dollar amounts.
In this case you could spend $595.00.
Please keep in mind that these are guidelines that we use
to get started. They are not set in stone and many of the
first time home buyer programs use different guidelines. You
will need to meet with me to get more exact information.
Note:
For the above calculations and any calculations you might
do you need to keep in mind there are more than four weeks
in a month. To adjust for this take your weekly pay multiplied
by 52. Divide that by 12 and that is your monthly pay.
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Regardless of which program you use, you will not be allowed to
exceed either of the two limits.
Sometimes figuring out the programs and spending limits that are
within your reach can be difficult. The best thing is to call Brian
Eichelberger to meet with him in person so he can decide which program
is best for you. An important thing to remember is that these are
not the only programs, rather the ones most known and used.
Meeting with Brian will be free of charge and will take about a
half hour. Brian will do a free credit report and will figure out
the first time homebuyer program that is best for you.
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