FAQ - How Much Mortgage Can I Afford?
Didier Malagies • February 15, 2022
How to determine how much house you can afford.
To calculate how much house you can afford, we take into account a few primary items, such as your household income, monthly debts (for example, car loan and student loan payments) and the amount of available savings for a down payment. As a home buyer, you’ll want to have a certain level of comfort in understanding your monthly mortgage payments.
While your household income and regular monthly debts may be relatively stable, unexpected expenses and unplanned spending can impact your savings.
A good affordability rule of thumb is to have three months of payments, including your housing payment and other monthly debts, in reserve. This will allow you to cover your mortgage payment in case of some unexpected event.
An important metric that your bank uses to calculate the amount of money you can borrow is the DTI ratio — comparing your total monthly debts (for example, your mortgage payments including insurance and property tax payments) to your monthly pre-tax income.
Depending on your credit score, you may be qualified at a higher ratio, but generally, housing expenses shouldn’t exceed 28% of your monthly income.
For example, if your monthly mortgage payment, with taxes and insurance, is $1,260 a month and you have a monthly income of $4,500 before taxes, your DTI is 28%. (1260 / 4500 = 0.28)
You can also reverse the process to find what your housing budget should be by multiplying your income by 0.28. In the above example, that would allow a mortgage payment of $1,260 to achieve a 28% DTI. (4500 X 0.28 = 1,260)
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If you have been displaced by a hurricane and are currently renting, we have some good news for you. You may be eligible for an FHA 203H home loan . The FHA 203H home loan is available to renters who were displaced by a natural disaster and are looking to purchase a new home. The FHA 203H home loan is an excellent option for renters who want to become homeowners, and have been displaced by a hurricane or other natural disaster.
The short answer is Yes, you can sell your home or pay off your reverse mortgage. But here's what you need to know...
The answer is yes. If you take out a reverse mortgage, you are required to pay taxes and homeowner's insurance. Reverse mortgages are a way to convert your home equity into cash or a stream of payments. For seniors, they can be a great way to get the money they need without needing to liquidate other assets or sell their home.
Reverse mortgages are an increasingly popular way for seniors to get help with their bills and stay in their homes. But there are some misconceptions about how they affect Social Security and Medicare.
The short answer is yes, Condos, Villas, Townhomes, and Co-ops can qualify for reverse mortgages? But there are some important caveats.
Now is not the best time to refinance with rates going up. However, if you need cash to pay off high-interest adjustable debt that is climbing or if you want to take on a home project because of the increased equity of your home, cash-out refinancing is still a good option. Remember, you can always refinance again, when the rates are lower. If you don't need the money, I suggest waiting until rates come back down. Here's why. I've been in the mortgage industry for over 35 years. I've seen this cycle many times. The Fed is raising rates. Eventually, this will slow down the economy and lead to a recession. The Fed will lower rates to recover from the recession. Once this happens, it will be a good time to refinance, cash-out, pay down debt, and take on home projects. When rates drop, it will be a great opportunity to take advantage of all that equity you've built up. Rate drops are hard to predict for several reasons, but the cycle is consistent. Mortgage rates rise and fall based on a number of factors like: Changes In The Bond Market Affect Mortgage Interest Rates The bond market is a huge part of the mortgage rate equation. And that's because bonds are what most lenders use to fund their mortgages. When interest rates rise in the bond market, lenders have to pay more for their funds, which means they can't afford to offer as many mortgages at a lower rate as they could before. That makes it more expensive for borrowers to get a loan. Changes In The Secured Overnight Finance Rate Another factor that can affect mortgage rates is the Secured Overnight Finance Rate (SOFR). It's the rate banks charge each other overnight for short-term loans. The Federal Reserve sets this rate every morning and adjusts it throughout the day based on how well banks are doing financially. When SOFR rises or falls, so do other rates like LIBOR and T-bill yields — all of which impact mortgage rates. The Constant Maturity Treasury Rate Affects Rates This is another important factor that can affect your mortgage rate: The Constant Maturity Treasury Rate (CMT) is a benchmark used by lenders to determine how much interest they'll pay on bonds they buy from investors — such as those issued by Fannie Mae and Freddie Mac. When CMT rises or falls, so does your mortgage rate. The Health Of The Economy Affects Rates When the economy is strong and growing, it's likely that mortgage rates will decrease as well. This is because lenders are more willing to lend money when they're confident that they'll be repaid. In addition, homebuyers tend to have more job security when jobs are plentiful and salaries increase, so their ability to repay their loans is better than if they were unemployed or underemployed. The Health Of The Economy Affects Mortgage Rates When the economy is strong and growing, it's likely that mortgage rates will decrease as well. This is because lenders are more willing to lend money when they're confident that they'll be repaid. In addition, homebuyers tend to have more job security when jobs are plentiful and salaries increase, so their ability to repay their loans is better than if they were unemployed or underemployed. Inflation Affects Mortgage Rates Inflation is another factor that affects mortgage rates. Higher inflation leads to higher interest rates because lenders know that they will be paid back with less buying power than they lent if inflation continues at its current pace. The term structure of interest rates is another factor that affects mortgage rates. This refers to the difference between short-term interest rates such as three-month Treasury bills and long-term ones such as 30-year mortgages. The yield curve refers specifically to this spread between short-term and long-term yields on government bonds or home loans. When investors want higher returns from longer maturities, they usually require a higher yield on those investments. When all this will happen is hard to predict for several reasons, but the cycle is consistent. I'm Didier at DDA mortgage. I always want to give you options, so you can get the best loan with the best terms to fit your situation. If you have any questions about refinancing your home, call DDA Mortgage at (727) 784-5555 , or use the form below to send us your questions.
When shopping for a reverse mortgage, there are some things you need to know. First, many lenders offer reverse mortgage loan products but few specialize in them. You want someone who will work with you and guide you through the process so that you can get the best terms possible on your reverse mortgage. Always look for a reverse mortgage specialist.
Buying A Home Vs Renting A Home In An Inflationary Market In an inflationary market, buying a home is usually better than renting. Here's why: Inflation is not transitory, it is going up, but for homeowners, their mortgage principal and interest payments will never change. Renters on the other hand will see rent increase with inflation. It doesn't matter if you are renting a house or apartment, your rent will go up. Mortgage Expense And Your Budget Most renters understand this concept; however, they believe mortgages are more expensive and they can't afford one. In general, this isn't true. However, you do need to compare your rent payment to your potential future mortgage payment. The monthly payment on a mortgage is usually lower than the monthly rent payment for the same house or apartment, but not always. Try our mortgage calculator to see if your payments will be higher or lower, and compare your potential mortgage payments to your rent.
The proceeds from a reverse mortgage are not taxable. This can be very beneficial for seniors who are on a fixed income. But, please remember, your payments are not income. You are still borrowing money that will be paid back when your estate is settled, and you are still responsible for paying your property taxes.
With a Home Equity Conversion Mortgage (HECM) loan, you cannot outlive the loan. The loan will become due when you pass away. If the house still has equity, your heirs can sell the home, pay off the balance of the loan, and disperse the proceeds. If the balance of the loan is greater than the equity of the home, your heirs and your other assets are NOT responsible for the difference. If you are married and apply for a joint HECM, the reverse mortgage isn't due until the last borrower passes. Here's what you need to know according to HUD.gov as of the publication of this article.
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A new survey from Clever Real Estate shows that 61% of baby boomer homeowners say they “never” plan to sell their homes, a jump of 7 percentage points from 2024. The main reason? More than half want to age in place. That’s a big shift. Baby boomers now make up the largest share of U.S. homeowners, and if more than 6 in 10 say they’ll “never” sell, that has ripple effects: Inventory squeeze : With fewer boomers putting homes on the market, younger buyers have less supply to choose from, which can keep prices elevated. Aging in place trend : The desire to stay put often means investing in accessibility upgrades—things like stair lifts, walk-in showers, and smart home tech for safety. Generational divide : Millennials and Gen Z face higher borrowing costs and limited starter-home availability, while boomers are holding onto larger family homes longer. Long-term planning : Some experts note that many of these homes will eventually transfer through inheritance rather than sales, changing how housing stock re-enters the market. Didier Malagies nmls212566 DDA Mortgage nmls324329
Excited to share a major update that will make the homebuying process more secure and less stressful. President Donald Trump recently signed the Homebuyers Privacy Protection Act of 2025 into law. This bill is a significant victory for the real estate industry, as it directly addresses the problem of unwanted calls, texts, and emails that often flood clients upon mortgage application. What's Changing? For years, many borrowers have experienced a barrage of unsolicited contact from different lenders immediately after their mortgage application. This happens because of "trigger leads"—a process where credit reporting agencies sell information to other companies once a credit inquiry is made. Effective March 5, 2026, this new law will put a stop to this practice. It will severely limit who can receive client contact information, ensuring client privacy is protected. A credit reporting agency will only be able to share trigger lead information with a third party if: • Clients explicitly consent to the solicitations. • The third party has an existing business relationship. This change means a more efficient, respectful, and responsible homebuying journey. We are committed to a seamless process and will keep you informed of any further developments as the effective date approaches. In the meantime, you can use the information below to inform clients how to proactively protect themselves from unwanted solicitations. Opting Out: • OptOutPrescreen.com: You can opt out of trigger leads through the official opt-out service, OptOutPrescreen.com. • Do Not Call Registry: You can also register your phone number with the National Do Not Call Registry to reduce unsolicited calls. • DMA.choice.org: For mail solicitations, you can register with DMA.choice.org to reduce promotional mail. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
We're excited to share a major update that will make the homebuying process more secure and less stressful. President Donald Trump recently signed the Homebuyers Privacy Protection Act of 2025 into law. This bill is a significant victory for the real estate industry, as it directly addresses the problem of unwanted calls, texts, and emails that often flood clients upon mortgage application. What's Changing? For years, many borrowers have experienced a barrage of unsolicited contact from different lenders immediately after their mortgage application. This happens because of "trigger leads"—a process where credit reporting agencies sell information to other companies once a credit inquiry is made. Effective March 5, 2026, this new law will put a stop to this practice. It will severely limit who can receive client contact information, ensuring client privacy is protected. A credit reporting agency will only be able to share trigger lead information with a third party if: • Clients explicitly consent to the solicitations. • The third party has an existing business relationship. This change means a more efficient, respectful, and responsible homebuying journey. We are committed to a seamless process and will keep you informed of any further developments as the effective date approaches. In the meantime, you can use the information below to inform clients how to proactively protect themselves from unwanted solicitations. Opting Out: • OptOutPrescreen.com: You can opt out of trigger leads through the official opt-out service, OptOutPrescreen.com. • Do Not Call Registry: You can also register your phone number with the National Do Not Call Registry to reduce unsolicited calls. • DMA.choice.org: For mail solicitations, you can register with DMA.choice.org to reduce promotional mail. Didier Malagies nmls212566 DDA Mortgage nmls324329
