What Can I Afford?

Your lender decides what you can borrow but you decide what you can afford.

Lenders are careful, but they make qualification decisions based on averages and formulas. They won’t understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.

Historically, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn’t be more than 28 percent of the buyer’s gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn’t be more than 36 percent. (In Canada lenders apply similar formulas to determine how much a buyer can afford. The Gross Debt Service ratio, or GDS, is not to exceed 32 percent of the buyer’s gross monthly income, and the Total Debt Service ratio, or TDS, is not to exceed 40 percent of the buyer’s total debt load.) As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.

Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.

Truman Fleming

REALTOR®

702 600 8184

Truman Fleming

REALTOR®

Truman Fleming is a relocation specialist with Keller Williams Realty Southwest in Las Vegas Nevada. Since the age of 18, Truman has been a licensed Realtor® and has quickly established himself as a top agent in the valley. Within his first year in the business he was awarded top rookie agent at Keller Williams Realty, and one of the top-producing individuals every following year. Truman primarily focuses on the Henderson part of town and is a local expert on the area. Truman Fleming and Jeremy Day joined forces in 2016 to form VegasParadiseHomes.com. Since teaming up, they have consecutively been the #1 team every month at Keller Williams Realty Southwest.
702 600 8184
Las Vegas, NV

Jeremy Day

REALTOR®

702 349 7089

Jeremy Day

REALTOR®

Jeremy Day is a full-time Realtor and Relocation specialist at Keller Williams Realty Southwest. Jeremy’s passion is helping people find their new home. His primary service areas are Summerlin, Las Vegas (West), and Las Vegas Strip High Rises. Prior to pursuing a career in Real Estate, Jeremy spent over 10 years in the highly competitive pharmaceutical sales industry. His previous sales experience has given him a distinct advantage when it comes to negotiations. Jeremy Day and Truman Fleming joined forces in 2016 to form VegasParadiseHomes.com. Since teaming up, they have consistently been the #1 team at Keller Williams Realty Southwest. Go to my Bio Page »
702 349 7089
Las Vegas, NV

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