Qualifying for a Loan
How much do I qualify for?
When buying a home, it is necessary to determine the type of home you want and how much you can afford — before beginning your search. Most lenders allocate approximately 28% of your GROSS MONTHLY INCOME to housing expense. Housing expense includes principal, interest, taxes and insurance (PITI). To get an idea of how much you can afford to pay each month for a home, multiply your gross monthly income by 28%.
When coupled with current outstanding loans, the total for your debt service should not exceed 36% of your gross monthly income. Some lenders may have slightly more liberal requirements or loan interest rates which may increase your purchasing power.
Mortgage interest, Santa Fe property taxes, loan fees or “points” are currently tax deductible (up to allowable limits). Points are generally deductible in the year paid. A point equals 1% of the mortgage amount. If you are in the 28% tax bracket, this is equivalent to receiving a 28% discount on your mortgage interest and property taxes. During the first years of the mortgage, your tax savings are especially high because most of your monthly payment goes toward loan interest.
GreenRoads Santa Fe Buyers Agents offers a list of local bank mortgage lenders and mortgage brokers who have well served past clients. Contact us to discuss your first steps in getting pre-approved for a loan.
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